Venezuela Why This Matters for Americans and Investors

Over the past few days, markets have been reacting to Venezuela, and like always, the headlines have been loud. Some people are calling it bullish, other people are calling it destabilizing, and of course there's been a lot of discussion about oil. But as usual, the market's behavior tells a different story, which is what I want to tell you about today. So in today's video, I want to do what we always do. Ignore the emotion, ignore the sensationalism, and just focus on how the markets are actually responding and what it means for the U.S. economy and for investments as well. And let's break this down into four parts. Part one's going to be about how markets reacted in the short term. Part two, about why oil prices are not behaving the way that many people thought that they would behave. And part three, consequences for Americans. And part four, consequences of de-dollarization. So let's start with the market reaction. The first thing that matters is this, that markets did not panic. There was no broad sell-off, there was no surge in volatility, and there was no rush into cash. Instead, we saw a very targeted reaction. So for example, energy stocks moved sharply higher on Monday, so that was the first trading session after the news was released. Okay, why? Why did that happen? It's because of course, they're the ones that are going to go in there into Venezuela and they're going to get the contracts. The President Trump is already in discussions with the major oil companies. And the Trump administration in Venezuela are already in talks about Venezuela exporting oil to the United States of America. That's because US refineries are set up to process the thick, heavy oil that comes out of Venezuela. Okay, here's what you need to know. Global oil production is about 100 million barrels a day, okay? Back 10, 15, 25 years ago, Venezuela was producing two to three million barrels a day, and that's a lot. That's enough to sway the oil markets. But that output, as you can see, it's plunged to about 800,000 to 900,000 barrels a day. And that's due to mismanagements, underinvestments, and the exodus of people and talents. Okay, so I just want you to think about that. The world is producing 100 million barrels a day. Venezuela contributes less than 1% of that. So yeah, they have the biggest oil reserves, but right now, they're not a big player in terms of production. So that's why the price of oil has basically done a whole bunch of nothing on the news. So this is a one-month chart of the price of oil, WTI crude. And it's going to be a similar price action for Brent crude. And you know, take a look. There's no big reaction, but why is that? Because again, Venezuela does not produce a lot of oil at the moment. Therefore, I'm telling you, do not expect gasoline prices to shoot up or down. Honestly, for the short term, this is going to have minimal impact. That's because revitalizing Venezuela's oil sector is going to require time. It's going to require a lot of time. It's not going to be a quick process. Trump is saying as soon as 18 months, but I'll tell you, that's uncertain because we don't know how bad the instability is going to become in Venezuela. So in theory, here's the game plan of how the US government envisioned this all going down. It starts off with the USA performing a regime change in Venezuela. And then the new Venezuelan government is going to receive a rip-off deal that's going to allow the USA to extract their oil, their gold, and rare earths. So the US is basically going to get cheap oil, access to rare earths, and gold. So Venezuela's thick, heavy crude oil, that's primarily going to be used to produce diesel fuel. So that's going to power diesel fuel powers, trucks, tractors, construction machinery, military vehicles, even some data centers. And basically, we're going to get it for a dirt cheap price. And if that happens, inflation will be subdued. We're going to get higher economic growth, and the USA will prosper. And Venezuela's going to see some of that revenue in the form of royalties. But again, it's most likely going to be a lopsided, unfair deal. Okay, so that's the plan. However, like I'm telling you, so much can go wrong. It's not like Venezuela's going to immediately be on the road to recovery. Just think about it. No, their situation's going to get worse before it gets better. And as the situation gets worse, who knows how it's going to affect this game plan. Whether it's going to be a setback in terms of the time frame, or whether it's going to completely unravel the plan. You can let me know what you think in the comments down below. Now, I want to talk to you about gold, because I think this is very important. Because this is where markets are telling you how they really feel. Gold moved higher following the Venezuelan developments. Not violently, not parabolically, but steadily. And that's exactly how gold behaves when uncertainty increases without panic. So this is something that many investors misunderstand. Gold does not only move when markets crash. No. Gold moves when confidence becomes less absolute. And geopolitical events like this do exactly that. Now, a lot of people are going to assume that gold and stocks are always going to be opposites. If stocks go up, then gold's going to go down. And the reason why many people believe that is because stocks are generally considered risk-on, and gold is considered risk-off. But I just want you to know that's not true. You can absolutely have, at the same time, rising stock markets, and at the same time rising gold prices. Because they respond to different forces. Stocks respond to liquidity, earnings expectations, and growth narratives. Gold responds to uncertainty, geopolitical risk, monetary credibility, and long-term purchasing power. And right now, we have a situation where liquidity is being supported. Just take a look at what the Federal Reserve is doing. What are they doing? They're printing $40 billion a month. And also, we have a situation of geopolitical uncertainty that's rising. And of course, that combination is going to be ideal for gold. And I want to make this crucial point that gold is not about a fear trade. It's rather an issue of trust. When investors, institutions, or governments become less confident in political stability, and monetary discipline, and long-term predictability, they don't abandon the system. They're going to hedge against it. And gold is going to sit at the center of that hedge. So that's why central banks continue to accumulate gold, and that's why gold reacts to geopolitical news. So I'm telling you that Venezuela is not an isolated story. No, it's part of a broader pattern of geopolitical fragmentation. And gold thrives in that type of environment. And you have to ask yourself, just simply, are we moving towards a more stable world or a more unstable one? I believe that there's going to be more instability. And again, that's going to be a great setup for gold. So I just want you to see this. Here's a one-year chart of the price of gold. And as you can see, of course, it's been doing well. And I want to show you the one-month chart of the price of gold so you can see how it reacted to this news. Gold actually hit a record high on December 26th when it was at $4,550 a troy ounce. It had a minor correction to about $4,400 a troy ounce after reaching that record high. It was just floating around there, as you can see. And then when this news was released, gold shot back up. But you know what? In all honesty, my belief is that this is just a short-term reaction. And I don't think too much of it as a long-term holder of gold, but it plays into why gold keeps on moving up and why it's going to continue to go up. So let me explain why. Let's just talk about the bigger picture, about what's really going on here. China, Russia, BRICS are de-dollarizing. What does that mean? It essentially means that they want to get off the dollar system and they're convincing other countries to do the same. Why is that? It's because they don't like how the U.S. operates. Essentially, the U.S. government says to these other countries, do what we say, otherwise we're going to play dirty. For example, when Russia invaded Ukraine, the West froze and confiscated $300 billion of Russia's money. Listen, I'm not saying that it's okay to invade another country. I'm just saying what happened. They did something that the U.S. didn't like, and then we froze their assets. Everything's digital, we can do that, and we did that. So, do you think that Putin wants to continue using the U.S. dollar? Of course not. It's like China. Become a vassal of the United States and serve us. And the Chinese, they don't want to live in servitude, so they're getting off the dollar system. They're no longer buying U.S. treasury bonds, in other words, they're no longer lending money to the United States of America, to the governments. Instead, with their surpluses, they're buying gold, and they're letting their U.S. treasury holdings just run off. And it's just like Venezuela. If you're going to sell your oil, then you must sell your oil in U.S. dollars. Venezuela said no, which was a red line, and then look what happened. Regime change. So, listen, other countries want to get off the dollar system because they don't want to put up with gunboat diplomacy, which is a foreign policy that's supported by the use or threat of military force. And it's not just empty threats, as you clearly saw. So just taking a look at what happened in Venezuela, do you think it's going to encourage other countries to use the U.S. dollar or to de-dollarize? Well, obviously, this further encourages China and Russia, the biggest players, to de-dollarize and continue de-dollarizing. So here's the final takeaway. When you take a step back and you look at the full picture, here's what actually matters. The markets are caught. Oil is behaving rationally, and the U.S. economy is not facing a shock. But beneath the surface, capital is adjusting. Gold is pricing uncertainty. Oil is pricing fundamentals, not emotion. Okay, the U.S. dollar, yeah, it still remains dominant, but the world is quietly hedging around it. So that's my take. Please subscribe. I thank you for the support. I wish you a very nice day. Take care.