It’s been over a month since Israel and the US launched a major strike against Iran, culminating in turmoil in the global economy with oil spiking to over US$100 a barrel.
There’s a major blockade in the Strait of Hormuz, upending the supply of oil, gas and other critical cargo.
The financial markets also took a hit, especially commodities, as people cast their minds to the 1970s oil crises that brought much hardship. We’ve already seen petrol prices rise to over $2.50 a litre while diesel has jumped to over $3.
It seems like there are no winners in this. Moreover, people with contrasting views of President Trump are wondering why strike Iran in the first place, and what is to come.
The news headlines have been equally confusing. There are scenes of carnage inside Iran, Israel and in neighbouring Gulf nations. We saw the destruction of key oil and gas processing facilities, desalination plants, and civilian buildings.
The two warring sides have declared what they would do to their enemies. The world is holding its breath for another escalation as the Trump administration signalled it is considering sending US troops into Iran. Meanwhile, the Iranian regime retaliated by threatening to turn the region dark by targeting key infrastructure.
And just as the world was at the edge of their seats worrying about these threats following through, there’s a change in tone with President Trump, the Iranian regime and even Israeli Prime Minister Benjamin Netanyahu. You may have heard President Trump say that it is open to ending hostilities even if the Strait of Hormuz is closed.
And as I drafted this article last night, the Iranian President Masoud Pezeshkian responded by saying it may open the Strait for guarantees against further attacks by Israel and the US.
Confused about all this?
Perhaps it’s because the world was led to believe that the two warring sides would battle to the death.
One thing is certain. The fight goes on as long as the US military wants to. Which means it’d be President Trump’s call.
So why is he pivoting (or TACO as his detractors love to use)?
Because the conquest of Iran was never the objective. There are bigger goals than that… let’s explore them.
Unsettle your enemies and
confuse your allies
Like him or hate him, the world is currently going down the path that President Trump will take.
Regardless of what we think of him, it’s important to admit one thing.
Anyone who thinks they know more than he does is delusional. He’s the US President, with access to intelligence and secrets that are second to none!
And there’s one thing that his detractors will hate me for saying what I’m going to say.
President Trump may behave erratically, talk stupidly, and make seemingly haphazard decisions. That’s a persona used to unsettle his enemies, and even confuse his allies.
This is the essence of Sun Tzu’s Art of War.
And as much as many hate to admit it, he and his administration are gaining momentum against those who stand against him. These people are losing influence, access to funds, and power.
This momentum includes bringing businesses back into the US, defeating the woke ideology in business and academia, and exposing the corruption and depravity that’s entrenched in governments, institutions and society.
More people are realising they live in a society that is a façade.
You can also see the impact of the administration against his enemies. That’s the best indicator of who’s got the upper hand. These people lose their sanity at the mention of his name – the politicians, business figures, Hollywood celebrities, etc.
He’s gotten into their minds, while his influence gains and theirs weaken. Some are having their dirty laundry revealed in the Epstein emails, with some under criminal investigations or facing charges.
I have a feeling that hell is waiting for them way before… and they know that too.
How does Iran come into it?
It’s about the strategy on ‘draining the Swamp’.
‘The swamp’ within the US – Deeper,
wider and more complex
How do you complete a complex project, like building a house?
You split the project into parts, work on them separately before putting everything together.
Dealing with an entrenched system that has its tentacles around the world takes a long time. They are interconnected – whether it’s politically, financially, or ideologically. The logistics are complicated.
In the eyes of the Trump administration, the America First agenda faces internal threats of an entrenched judiciary (the Supreme Court and the lower courts) and legislative system (Congress) that businesses, academia, foreign agencies have infiltrated. Whether you agree with America First policies or not, a country’s priorities should be in the interest of its own people ahead of those outside. Anyone who makes laws or adjudicates them by acting contrary effectively undermines the US Constitution and the country. It is worse when these officials have foreign ties or are funded overseas to act this way.
The US is divided against itself. We’re now seeing judges, Congressional members, and key appointed public officials inverting the country’s priorities and perverting the course of justice.
Think about the massive fraud uncovered in Minnesota with the Somalian community, Former House Speaker Nancy Pelosi’s share portfolio trades, the New York Attorney-General Letitia James and Democrat Congressional member Adam Schiff facing charges of mortgage fraud – the list goes on.
This is what the Trump administration deems as ‘The Swamp’.
To remove this threat requires the Congress to impeach and remove judges, appointed cabinet members and other public servants who may have committed treason, high crimes, and misdemeanours. The House of Representatives files the articles of impeachment, while the Senate acts as the court to vote on whether to remove or retain the accused.
Without the power to impeach, this Swamp will survive him and anyone else who stands in the way.
The Iranian strike as part of a bigger plan
Again, how does this relate to Iran?
It comes down to the mid-term elections, which are held on 3rd November this year.
The average voter may or may not have a preference on what happens in Iran, Venezuela, Russia, or China.
Their bottom line is their livelihood – housing, food, oil, job, healthcare, etc.
The attack on Iran caused oil to soar, hitting households and businesses alike. Not only that, it could upend the world’s supply chain, creating a long-lasting global economic depression.
This would blow up the Trump administration’s chances, especially if the conflict drags on. After all, it’s hard to fix the economy quickly, so time is of the essence.
The strikes on Iran had two key objectives –
1. To break the chokepoint that existed in the Strait of Hormuz, which was under the control of the Ayatollah regime and the Iranian Revolutionary Guard Corps, and
2. Reveal which nation’s leaders are reliable allies who would step up to defend their interests, given their reliance on the Strait of Hormuz.
Yes, regime change was put front and centre. This arose from the tragedy of the brutal crackdown of a massive number of Iranian protesters against the Ayatollah earlier this year. However, history showed that foreign intervention to topple a regime required ground troops and would likely backfire on the invaders.
Many were expecting this and have held the Trump administration to this objective, not knowing that it was a stretch target with risky consequences.
To be blunt, it’s naïve to believe everything that a participant of a conflict broadcasts in public about their plans or progress.
What you know, the enemy will too.
We’re dealing with asymmetric information. In such cases, we’re meant to filter what we’re told, watch how things unfold, and reassess what is actually going on.
The military strikes might have achieved enough of the first objective. We’ll find out in the coming months whether a ceasefire will take place and how long that lasts.
As for the second objective, that is most revealing and probably not what many saw coming.
The most affected nations by the blockade in the Strait of Hormuz are those in the European Union, Asia, and Australia.
They have the most agency to negotiate with or force Iran to lift the blockade. Except, many of these countries’ leaders moralised the strikes and attempts at regime change. None of that has anything to do with securing their oil and cargo shipments through the Strait, which is critical to their economies.
Roll the clock back to President Trump’s first term. He had criticised many US allies for contributing less than their fair share in his first term and for failing to secure their energy sources.
This episode was basically a case of letting these nations taste the consequences.
Yet, during this conflict, the likes of the UK’s Sir Keir Starmer, France’s Emmanuel Macron, and our own Foreign Minister Penny Wong stood aloof and spoke platitudes. They were so out of touch with their country’s needs, as petrol prices soared and fuel shortages left some pumps running dry.
NATO is willing to beat its chest and flex its muscles over Ukraine, despite consuming Russian gas until Russia stopped supplying them. It did no more than twitch its muscles over Iran, which controlled the key passage to its oil imports.
I believe history will record their failures. It’ll be humiliating. They will face the wrath at the ballot box for their bungles, all because they opted for feel-good politics and shown themselves to be as useful as a fifth wheel in a car.
Our society currently runs predominantly on fossil fuels, not empty words, aspirations detached from reality, and gestures of fake virtue.
A plot twist: The petrodollar gets
a temporary ‘time extension’
Looking beyond the current volatile developments, I believe that a shift in Iran’s foreign relations will be pivotal to the petrodollar system.
Iran’s key consumer of its oil is China, which receives a generous discount on the spot price for its purchases. This arose from Iran’s oil being outside the petrodollar system, as Iran was removed from SWIFT in 2012. This is key to China powering its manufacturing hub.
This conflict has seen some interesting changes, including the US permitting Russia to send oil to India. This has partially lifted the sanctions on Russian oil and its exclusion from the SWIFT system since the Russia-Ukraine conflict broke out in February 2022.
There’s an irony in the petrodollar system: its strength in deciding who are its participants is negatively correlated with its stability. We saw how the sanctions on Russia, coupled with the rapid rate rises in 2022-23 actually hurt the petrodollar system and helped boost its alternatives – gold and the BRICS system.
The problem is that the petrodollar system has an Achilles’ heel: inflation. An adequate supply of cheap oil and other energy sources is the antidote to inflation.
The Trump administration is aware of this and therefore has set its sights on weakening China’s economy. That’s why it struck Venezuela earlier this year, with Iran being the next target. By cutting China off its cheap oil, it hobbles its economy and manufacturing hub. If Russia is swayed to the US through a deal over ending the conflict in Ukraine, the BRICS system will crumble,
There is no doubt that the road ahead won’t be smooth. Who knows which country will be the next flashpoint –
Cuba?
Nicaragua?
Taiwan?
China?
Or inside the US?
However, it’s time to shift the focus on President Trump as a person and instead see him as an agent of disruption and change.
Like or loathe him, the world is moving through a major change in the global and social order.
The petrodollar system might have a brief recovery, but it won’t outmuscle gold and commodities.
Set your emotions aside and focus on understanding the game plan in this global arm-wrestle.
Place your wealth not on who you like, but on who understands the system better and can bend it to their will.
To learn more about navigating this historical period with precious metals investing, I invite you to become a member of my investment service, The Australian Gold Report.
Not only will you get access to the electronic version of my book, Gold’s True Message: A Guide to Building Wealth in a Failing Monetary System, you’ll get regular updates on how to build a precious metals portfolio. My readers saw gold’s turnaround ahead of time, positioning themselves to add more gold and silver stocks as they bottomed last week.
That’s it from me for this update. Have a Happy Easter and enjoy it with your family and friends!
God Bless,
Brian Chu,
Gold Stock Pro and The Australian Gold Report
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