January 19, 2026
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On 3 January 2026, the United States launched a military strike on Venezuela and captured President Nicolás Maduro and his wife Cilia Flores. The world woke from New Year celebrations to confrontation unthinkable by the standards that had governed international relations since 1945. Yet what made this extraordinary event more remarkable still was markets’ muted response.
This disconnect between geopolitical shock and market response reveals something profound about the current investment environment. Either markets have become inured to disruption, or they are dangerously mispricing the risks accumulating across multiple fronts simultaneously.
Trump and his administration made clear that access to Venezuelan oil was a core reason for the action. The operation represented the first major forcible regime change by the United States since Iraq. American control of Venezuelan oil reserves also introduces a new variable for investors in emerging markets and commodity-linked economies, where political developments can quickly influence growth, currencies and capital flows. In such settings, outcomes tend to be less linear and more uneven across countries and sectors, placing greater emphasis on careful security selection, regional insight and active risk management rather than relying solely on broad market exposure.
President Donald Trump later said his administration will take action on Greenland “whether they like it or not.” This represents not merely negotiating pressure but a fundamental challenge to the post-war alliance system. Denmark and its European allies in NATO have pushed back, reiterating that Greenland is not for sale. The threat to NATO cohesion at precisely the moment when European security faces Russian pressure creates dangerous uncertainty.
Beginning on 28 December 2025, demonstrations erupted across multiple cities in Iran amid widespread unrest against the Islamic Republic government and a deepening economic crisis. At least 490 protesters have been killed and more than 10,000 people arrested over the past 15 days, according to the US-based human rights group HRANA. For investors, Iranian instability carries implications extending beyond that nation’s borders. Regime change in Tehran could prove transformative for Middle Eastern oil markets and regional security, yet the transition process itself poses acute risk of conflict and disruption to energy supplies through the Strait of Hormuz.
Despite escalating geopolitical risk, financial markets show limited signs of stress. The S&P 500 continues to trade at all-time highs, and volatility remains below twelve-month averages. This equanimity suggests either remarkable confidence or dangerous complacency. Markets have historically struggled to price geopolitical risk in advance, leaving them vulnerable to abrupt repricing when perceived probabilities change.
Gold provides the clearest signal that some investors recognise elevated risk. Spot gold rose as much as 2.9% on Monday, climbing above $4,455 an ounce. J.P. Morgan Global Research forecasts prices to average $5,055/oz by the final quarter of 2026, rising toward $5,400/oz by the end of 2027, driven by central bank diversification and persistent geopolitical uncertainty.
The U.S. is unwinding its own global order and will be the principal source of global risk this year, according to Eurasia Group. The American-led order that provided predictability appears to be dissolving without replacement architecture emerging. The Russia-Ukraine conflict grinds into its fourth year with no resolution visible, while NATO and Russia edge toward more dangerous confrontations in Europe.
For investors, several principles deserve consideration. First, avoid panic and remember that the fundamental error during geopolitical stress is transforming temporary uncertainty into permanent capital impairment through ill-timed selling. Second, remain invested with appropriate diversification. History shows that attempting to time geopolitical events proves futile. Third, consider increased allocation to safe assets like gold, which could surge 15-30% in 2026 under stress scenarios. Fourth, recognise that geopolitical risk now represents a structural feature rather than episodic shock, favouring themes like defence, cybersecurity, energy security, and supply chain resilience.
The current moment demands clear-eyed assessment of risks that markets may be underpricing. Venezuela, Greenland, Iran, Russia, and China represent interconnected stresses testing the international system’s capacity for managing conflict. The days when American power guaranteed a broadly stable international environment appear to be ending.
For investors, this means accepting heightened uncertainty as the baseline condition. Portfolio construction must account for scenarios previously considered too extreme to price. Yet accepting elevated risk does not mean abandoning markets entirely. It means maintaining discipline, diversifying intelligently, and recognising that the greatest opportunities often emerge precisely when others succumb to fear.
We would like to thank Dominion Capital Strategies for writing this content and sharing it with us.
Sources: Bloomberg, Yahoo Finance, Marketwatch, MSCI.
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