Yes, Iran. Yes, gold. Yes, oil.

Gold up just 1.6%. Brent crude up ~12%.

I’m not in the least bit surprised oil and gold didn’t move more.

These trades are well understood whenever the Middle East pops off.

In fact, too well understood.

That’s why getting swept up in consensus is the most dangerous thing for an investor. Ever.

Here’s how you avoid that…

It takes a bit of reflection.

And if you know where to look, the Iran conflict reveals everything you need to know about how money structures our world.

You can read Bloomberg of the AFR, where you’ll read about the financial dimensions of the war.

Money is just an assumed universal constant in those newsrooms.

But they’re not telling you something about money.

More precisely, what money is.

And once you start looking at the inherent and underlying nature of money, you can see past the headlines.

And it just might make you a far better investor over the next decade

I’ll share precisely where I’m looking for the next recommendations I’ll release across Australian Small Cap Investigator and Fat Tail Micro-Caps in a moment.

But first, consider this.

Money is a way of structuring relations.

Georg Simmel’s The Philosophy of Money or an essay of his called The Stranger provide clues here.

You walk into a shop…you and the shop owner know what to expect.

That interaction is structured by money.

What backs that money?

Yes, people like to talk about Nixon taking the US dollar off the gold standard in 1971.

Think about what really backs money though.

The 17^th century English philosopher, Thomas Hobbes had an answer.

It’s violence.

The power of the state is secured through a monopoly on violence.

It’s a nasty, brutish and short explanation of what money is.

I’ll be direct: when the state issues money – that money is secured by the state’s ability to wage war.

That’s right… every US Treasury bill, and effectively the entire global financial system’s “real, risk-free rate of return” is backed up by a military promise.

Comedian Denis Leary famously explained it this way:

“Because we’ve got the bombs.”

Source: Youtube

So that’s what is happening in Iran right now.

And in the current trajectory of geopolitics – money is now energy.

At the risk of sounding like too much of a realist, the US dollar equals access to resources and the ability to secure those resources with military might.

Increasingly though, the old oil-based hegemony that US President FDR secured on a warship in Egypt is being challenged:

Source: Wikimedia Commons

China’s dominance over new energy technologies and critical minerals processing is forcing the Americans’ hand.

AI is writing the new rules.

So the US will need to move quickly to secure access to the energy resources that power the AI revolution.

Wherever that access is most at risk… I call that a chokepoint.

And financial markets are directing their attention to those chokepoints quicker than you’d think.

So yes, I’m looking at a broad range of energy resource developers in the small-cap and the micro-cap end of the ASX.

Relative to other markets, we’re genuinely spoiled for choice in this regard.

And the directive is simple…

Own the chokepoints before the big funds and institutions come knocking.

If this kind of reasoning resonates with you – I urge you to read my new report.

It’s called Pax Silica: 5 Stocks To Buy as AI and Commodities Converge.