Geopolitical theater and implications for investors (or lack thereof)

The last month has been truly remarkable for modern human history – at least if one was paying attention to mainstream news headlines and TV anchors. Apparently, we came extremely close to World War III and we very likely had a very tight escape from an all-out nuclear holocaust that could have forever changed the our species’ trajectory and annihilated millions. 

It all started with Israel’s surprise bombardment of Iran (which wasn’t really a surprise to anyone paying attention to US government leaks to the press), which, predictably, led the Persian power to respond with its own counter-attacks on Israeli cities. Shortly thereafter, the US bombed “key nuclear facilities” in Iran with “Operation Midnight Hammer”, and Iran responded by launching missiles against a US base in Qatar, the majority of which were intercepted. Ceasefire negotiations quickly followed and were concluded the next day. The media made sure to present this whole episode with as much hyperbole and scary graphics as they could muster. US media in particular, made sure to justify the Israeli-US attack as an essential step to save the rest of humanity from Iran’s nuclear rage. 

The country was “weeks away” from developing a fully operational nuclear weapon, according to the experts that joined TV panel discussions. For those of us whose memories go back a little further back than the last month of course, this is the sort of claim that we can clearly recognize being repeated in regular intervals since at least the Iraq war. This manufactured sense of urgency and scaremongering has been used to justify countless other attacks, invasions and all kinds of geopolitical aggression. From the “weapons of mass destruction” that are still to be unearthed in Iraq, to evidence of Middle Eastern rulers “killing their own people”, to nuclear threats that seem to be “weeks away” from becoming irreversibly fatal for all of us (even though they appear to be “weeks away” for at least two decades), the US-led Western alliance clearly has playbook that keeps repeating itself. 

After this most recent escalation, however, a lot of anti-war and libertarian voices were raised in opposition to US involvement and clearly condemning any further action that would drag the superpower, and possible many other nations, to yet another forever war. Even fierce supporters of President Trump and his MAGA vision took exception to the trajectory things seemed to be taking and to the US leader’s menacing rhetoric and aggressive stance. For the first time in a very long time, it became finally abundantly obvious that Americans were tired of war. They have enough problems of their own, enough trouble putting food on their own table, taking care of their own children and ensuring they have peace and safety in their own neighborhoods, that there is absolutely no interest in sending their young men to die in pointless wars with no clear objective (or clear end). 

This must have come as a shock to the establishment and to their media collaborators. They tried to use the same playbook as before, but they quickly realized that their fear campaigns were not remotely as effective as they were in the past. Arguably one of the main reasons behind this is the internet and social media. Even though most of the popular social networking platforms are biased and they do tend to promote certain points of view and suppress others, as we saw in so many key political events in previous years (first Trump election, Brexit, etc), they are still infinitely more “permissive” than the legacy media. Sure, they can ban certain voices and they can ensure that some views get more visibility that others, but at end of the day, if they fully replicate the models of the likes of CNN and BBC, where a specific editorial direction supersedes everything else and no counterargument can be published against it, then they eventually lose relevance and their users migrate to a competitor – and so does their ad revenue. 

This is a lesson that Facebook learned the hard way, after Elon Musk bought Twitter (now X). While the platform is still far from perfect (and both Right- and Left-leaning users accuse it of being biased towards the other side), it undoubtedly provides the most freedom of speech and the most open online arena for free public debate, at least compared to other currently available options. This why a lot of diligent observers of current affairs and individuals with a deep understanding of history and geopolitics use it to debunk and challenge assertions of politicians or “news” and narratives from the mainstream media. And this is something that has proven effective, even despite Musk’s alliance with the current US government: heavy criticism and objections to the Iran conflict originated and gained traction there. It can even be argued that the visibility that this dissent and opposition to yet another war achieved helped make it clear to policy- and decision-makers that a much greater part of the public would not be willing to go along with their belligerent ambitions.

Another very interesting development that came out of this recent escalation, was that a lot more people, and especially investors, appeared to be much more aware of the difference between actual military aggression or serious, all-out engagement and mere posturing or theatrics. The market reaction was remarkably subdued, despite the bombastic commentary and the alarmist rhetoric by both the political establishment and the media coverage. In fact, markets seemed to be so “unperturbed” by these events that it led mainstream financial news outlets like CNBC to report with great concern that many experts were warning that “global investors may be underpricing the impact of a conflict between Israel and Iran” and to almost complain that “despite the continued fighting — with hundreds reported dead — global stock markets have sustained positive momentum”. 

This reveals a lot about the difference between the signal and the noise that I have been alerting readers and clients to for a long time. Events like the ones we saw over the last month, and the way in which we went from “the precipice of WWIII” to “business as usual” virtually overnight, clearly show the importance of remaining focused on the long game and avoiding the distractions that emerge from political theater. 

There is a very obvious, overarching, long-term trend that underlies most, if not all, of these moves and that is simply the need of governments to remain in power, to remind the people why they need them to protect them and to justify ever increasing levels of spending and borrowing. And this is the only signal that investors need to pay attention to: the debasement of their currency, the corrosion of their purchasing power and the diminishment of their salaries and their savings. War, or any other crisis for that matter, is always a great excuse to increase budgets and to extract more “protection money” from citizens, both current ones though taxation or future ones through inflation. This “looting” is likely to start where the low hanging fruits are and this means within the banking system. Capital controls, negative interest rates, confiscation, bail-ins and bail-outs, “asset registers”… Property rights are only of a temporary nature, as desperate governments can simply forcibly expropriate their citizens with minimal effort to hide or “package” their actions. There really is a “Great Taking” already underway, something we have looked into in great detail in our recentconversation with James Patrick, producer of the documentary by the same name.

This is why physical gold and silver remain the most time-tested means for investors and savers alike to protect themselves from the current and future attempts by their own leaders to impoverish them. The protection that physical precious metals offer is at its strongest when they are stored outside the banking system, in a reliable and predictable jurisdiction, were the people have the direct power to stop government overreach and attempts at limiting their liberties and threatening their property rights. Switzerland appears to be the only nation left that fits this description. 

Claudio Grass, Hünenberg See, Switzerland. www.claudiograss.ch

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