A week ago, Wall Street wasn’t giving serious thought to the possibility of forced regime change in Venezuela to gain control of its vast oil reserves. Most folks (including me) thought the United States would use the threat of military intervention to renegotiate what had become an untenable situation.

Now, the global financial markets are confronting two realities that it was not grappling with a week ago: (1) the United States is the de facto overlord of a country with the largest oil reserves in the world, and (2) the possibility that it may expand its reach over other valuable commodities by making a similar move in Greenland to gain control of its vast reserves of rare earth metals.

Yesterday, Robert Rapier explained how last weekend’s events could affect the three “supermajor” U.S. oil producers that were doing business in Venezuela before it nationalized its oil fields nearly twenty years ago (“Venezuela After Regime Change: What Investors Need to Know”). Of those three, only Chevron (NYSE: CVX) continued its operations there after the U.S. imposed severe sanctions on Venezuelan oil in 2910.

As Robert noted, “That continuity is a major competitive advantage.” Since Chevron “still has active assets and infrastructure” and “is already exporting Venezuelan crude under U.S. authorization,” it “does not need to re-enter Venezuela. It simply scales up.”

Knee Jerk Reaction

As it is apt to do, Wall Street reacted by bidding up shares of CVX by five percent on Monday. That day, trading volume in Chevron was more than four times its average daily volume.

If everything goes according to plan, Chevron should soon be able to ramp up its oil production in Venezuela at the same time many of the onerous restrictions imposed seven years ago by the first Trump administration are relaxed or eliminated. Higher sales revenues combined with lower production costs equal more profits.

However, that type of knee-jerk reaction to an unexpected event usually turns out to be wrong. That’s because a seismic geopolitical event of this magnitude has enormous repercussions, some of which cannot be foreseen.

When the United States used its military power last weekend to remove the leader of a sovereign nation and gain control of its natural resources, a message was sent to the rest of the world. Might makes right, and right now the mightiest nation in the world wants what other nations have in the way of petroleum and precious metals.

Another Way to Play It

I don’t know exactly how this latest gambit by the White House will play out, but I do know of a way to play it that should perform well regardless of what happens next. The Fidelity Global Commodity Stock Fund (NSDQ: FFGCX) owns shares of companies that produce oil, mine for metals, and grow crops.

This fund’s top ten holdings include Chevron along with Exxon Mobil (NYSE: XOM), Archer-Daniels Midland (NYSE: ADM), and Agnico Eagle Mines (TOR: AEM). Its single largest holding is Corteva (NYSE: CTVA), which provides seed and crop protection for farmers.

In the past, I have recommended this fund to my readers as an inflation hedge. When the prices of commodities rise quickly, profit margins for the companies that produce them expand since their operating costs are mostly fixed.

Now, I view this fund as a way to play renewed U.S. imperialism to gain control of natural resources outside its national boundaries. Today, oil is in play in Venezuela. Soon, it may be precious metals in Greenland. Later on, it could be food crops in some other part of the world.

What just happened in Venezuela could turn out to have a bigger impact on the global financial system in the long run than the outbreak of the coronavirus pandemic six years ago. It could also end up changing the dynamics of the commodity markets for a lot longer than that.