Grey Swan #4: America’s Covert Resource War in South America

“We owe it, therefore, to candor and to the amicable relations existing between the United States and those powers to declare that we should consider any attempt on their part to extend their system to any portion of this hemisphere as dangerous to our peace and safety.”

–The Monroe Doctrine

December 30, 2026 — There is war coming in 2026.

The explosions, firefights and bribes will barely make the evening news. It’s unlikely that, given the makeup of politicians in the House and Senate, nothing will be formally declared.

Hidden outcomes of conflict will nonetheless shape commodity prices, immigration politics, and U.S. foreign policy for the next decade.

The average American experience doesn’t have a comparable episode in the history of the United States to draw current events from. We will hear political buzzwords like “unprecedented” nearly as often as we hear “affordability.”

The application of the Monroe Doctrine will not resemble the bumbling search for weapons of mass destruction in Iraq. The events we see through social media will not resemble operations in Afghanistan. There will be no “shock and awe,” no aircraft carrier photo ops, no speeches about democracy echoing off marble columns.

It will look administrative. Transactional. Tactical. Fragmented. And it will unfold almost entirely in South America.

This is the Grey Swan hiding in plain sight: America’s quiet pivot from global policeman to hemispheric enforcer — a Monroe Doctrine reboot driven by resources, debt, and political exhaustion.

 Why South America, Why Now

The United States enters 2026 overstretched, indebted, and impatient.

Decades of expeditionary warfare across the Middle East produced little except veteran fatigue, fiscal drag, and voter cynicism. At the same time, China’s industrial expansion has secured long-term access to critical minerals, energy, and agricultural supply chains across Africa and Latin America.

The fastidious class who toils away in plush D.C. office buildings will have noticed.

The strategic logic is brutally simple. Not that simplicity matters to them. We’ll state it anyway:

If the U.S. can no longer afford to police the world, it will prioritize what sits closest to home. Oil, lithium, copper, rare earths, food, and shipping lanes in the Western Hemisphere matter more to America’s economic resilience than abstract security guarantees signed eight decades ago.

The Financial Times captured this shift late in 2025, noting that U.S. foreign policy is “increasingly transactional, geographically compressed, and resource-oriented.” Bloomberg went further, describing a “hemispheric retrenchment” underway beneath the noise of global diplomacy.

We have observed passively that empires of the past, burdened by debt, stop expanding ideologically and start contracting strategically. If nothing else, this is a guide that helps decipher Trump’s comedic efforts at the podium on the second-term victory tour he’s on.

 Venezuela: The Keystone Conflict

Every covert war needs a focal point. In 2026, that focal point is Venezuela.

The Maduro regime sits atop the world’s largest proven oil reserves, controls strategic access to Caribbean shipping routes, and serves as a geopolitical irritant aligned with China, Russia, and Iran. It also presides over a collapsed economy, a hollowed-out state, and a population desperate enough to flee north in historic numbers.

From Washington’s perspective, Venezuela presents an irresistible combination: moral cover, resource upside, and domestic political utility.

Under Secretary of State Marco Rubio — a longtime advocate of hemispheric containment and Cuban liberation — the diplomatic groundwork has already been laid. Sanctions enforcement tightens. Intelligence cooperation with Colombia intensifies. Opposition factions receive renewed backing. Financial pressure escalates quietly.

John Robb, in his contribution to our Grey Swan forecasts, describes this phase accurately: “creep.” Special forces. Drones. Cyber operations. Targeted strikes. Retaliatory harassment of shipping in the Gulf. Nothing dramatic. Nothing remarkable.

Reuters reported earlier this year that U.S. intelligence activity in northern South America has increased under the banner of counter-narcotics and migration enforcement. It’s not a secret. But the creative labels provide PR cover and flexibility, for now.

 Resources, Not Regime Change

This war is not about exporting democracy. That chapter closed years ago.

It is about stabilizing supply chains under conditions of global scarcity.

Lithium in Chile and Argentina. Copper in Peru. Oil in Venezuela and Guyana. Agricultural output across Brazil and the Pampas. Water access. Port control. Data infrastructure. Undersea cables.

The Wall Street Journal has already framed Latin America as “the next strategic battleground for industrial inputs,” noting that U.S. firms are accelerating joint ventures and long-term offtake agreements across the region.

Military power enters the equation as a form of insurance. It enforces contracts when institutions cannot. It deters rival powers from gaining exclusive access. It signals seriousness to domestic audiences without requiring large troop deployments.

 The Domestic Utility of a Distant Conflict

There is another reason this Grey Swan matters.

A covert foreign conflict offers something priceless to a debt-soaked democracy entering an election cycle: distraction.

When economic data disappoints. When inflation reaccelerates. When bond markets misbehave. When uncomfortable documents surface. When scandals metastasize.

If you’ve seen the 1997 film Wag the Dog, a covert war in South America provides a ready-made media extravaganza to monopolize mainstream press.

A sudden “security incident” abroad refocuses attention. It rallies factions. It reframes dissent. It justifies emergency authority.

This dynamic is as old as the republic. The difference in 2026 is scale and subtlety. There will be no draft. No war tax. No televised body counts. Just headlines about “targeted actions,” “regional stabilization,” and “protecting U.S. interests.”

“National security,” the catch-all phrase.

Fiscal weakness eventually expresses itself through political theater. War becomes a budgetary narrative tool long before it becomes a battlefield reality.

 China Watches, Then Adjusts

Beijing will not contest this directly.

China’s response will be patient and commercial. Increased lending. Infrastructure investment. Political insulation. Quiet expansion elsewhere.

The same pattern that plays out in Africa will repeat in South America: the U.S. applies pressure, China absorbs resentment. Washington enforces. Beijing finances.

Markets will understand this dynamic faster than diplomats. Energy equities react. Defense contractors benefit. Shipping insurance reprices. Emerging market risk spreads widen selectively.

No panic. No crash. Just adjustment.

 Why Markets Won’t Flinch — At First

Financial markets prefer predictability to virtue. A covert resource war offers clarity. It draws boundaries. It signals priorities.

As Bloomberg noted in a recent defense-sector analysis, “investors have learned to price in permanent low-grade conflict as a feature, not a bug, of the global economy.”

This Grey Swan will not trigger immediate volatility. It will quietly alter capital allocation. Long-duration infrastructure. Strategic materials. Security services. Logistics. Surveillance. Cyber.

Dollar 2.0 fits neatly here. Tokenized commodities. On-chain settlement. Faster collateral movement. War and finance always co-evolve.

 Why This Is Grey Swan #4

Most Americans will not recognize this as a war.

Most analysts will debate whether it qualifies as one.

Most politicians will avoid naming it.

Ambiguity is the point.

The U.S. is not retreating from global power. It is narrowing its definition to specific interests. South America sits at the intersection of resources, migration, debt politics, and domestic legitimacy.

In 2026, America’s most consequential military engagement will not be in Europe, Asia, or the Middle East. It will unfold closer to home, under different rules, with different objectives.

By the time it becomes obvious, the supply chains will already be secured, the alliances rearranged, and the costs quietly socialized.

Or so we believe is the aim. Unless politics intervene mid-stream…

~Addison

Next up: Grey Swan #3 — The Midterms Deliver a Political Shock Nobody Prices Correctly.

P.S. from Addison: We’ve got three more Forecasts for 2026 to go — what thoughts do you have thus far? What forecasts do you think we’ve missed and will be valuable to members? Send them here.

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Second a community forum to discuss investment trends, trade ideas, thoughts about economics, politics, the Fed… you name it. We’re testing the forum out behind the scenes now… we’ll update you as soon as we’re ready to release it into the wild.

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Our research going into more details on this new tool, and how we’ll use it to rack up more wins in 2026, goes live tomorrow – click here for a replay.

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