To The Moon

On January 5, ATFX: The United States unexpectedly launched an operation against Venezuela on January 3, 2026, detaining the country's President, Nicolás Maduro. Following the news, financial markets immediately shifted towards safe-haven assets at the week's open, as heightened geopolitical risks prompted investors to seek the safety of precious metals, driving up prices for gold and silver this morning. During early Asian trading on Monday, spot gold prices surged by as much as 2.1%, breaking through $4,420 per ounce, while silver prices climbed 4.8%. U.S. President Donald Trump stated that America plans to "take over" Venezuela after ousting the Maduro regime, injecting significant uncertainty into the future governance structure of this South American nation. Gold has just recorded its best annual performance since 1979, with prices repeatedly hitting new highs last year, supported by central bank purchases and inflows into gold ETFs. Three consecutive interest rate cuts by the Federal Reserve also boosted the appeal of non-yielding precious metals. However, gold experienced sharp volatility towards the end of the year, as some investors took profits and technical indicators signaled overbought conditions. Nevertheless, precious metals investors are maintaining caution due to the upcoming rebalancing of the Bloomberg Commodity Index, which could trigger concentrated selling by passive funds. Given the recent price appreciation, passive tracking funds may sell some contracts to align with the new target weights. Silver futures currently represent 9% of the Bloomberg Commodity Index, a widely used benchmark for a basket of commodities, compared to a target weight of just under 4% for 2026. This implies that over $5 billion worth of silver holdings will need to be sold during the five days starting this Thursday. Additionally, approximately $6 billion in gold futures are also expected to be sold. TD Securities estimates that 13% of the total open interest in the COMEX silver market could be liquidated over the next two weeks, potentially leading to a significant price decline. However, the current geopolitical risk premium is offsetting this downward pressure on precious metals. Markets are currently in a "news digestion phase," where any rumors regarding resistance within Venezuela, external intervention, or disruptions to oil exports could stimulate further price increases. In the short term, Maduro's detention has created a power vacuum, raising market concerns that Venezuela could descend into civil war or trigger broader regional instability. This "unpredictability" serves as the ideal fuel for a precious metals rally; as long as no clear, peaceful transition plan emerges, the safe-haven premium for gold and silver is unlikely to dissipate. From a medium-term perspective, if the U.S. military involvement in Venezuela evolves into a long-term presence or necessitates large-scale aid, it could increase America's fiscal burden and potentially impact confidence in the U.S. dollar, providing a deeper, more fundamental support for gold. Conversely, if the regime change occurs very swiftly and smoothly, safe-haven flows could rapidly unwind as investors take profits, leading to a sharp correction after any initial price spike. Historically, geopolitically-driven market moves are often characterized by their rapid onset and equally swift reversal.