Financial

Davos 2026

After the notorious Klaus Schwab, founder of the World Economic Forum, resigned following allegations of financial and ethical misconduct, the forum took on a new dynamic. Whereas speeches used to be an expression of blind faith in mainstream ideology such as globalisation, green transition, climate change, sustainable development, human and LGBT rights, today they feel like a breath of fresh air. Take, for example, US Secretary of Commerce Howard Lutnick, who said:

“We are in Davos at the World Economic Forum and the Trump administration and myself, we are here to make a very clear point. Globalization has failed the West and the United States of America. It’s a failed policy. It is what the W has stood for which is export offshore farshore find the cheapest labor in the world and the world is a better place for it. The fact is it has left America behind. It has left the American workers behind and what we are here to say is that America first is a different model. one that we encourage other countries to consider, which is that our workers come first. We can have policies that impact our workers. Sovereignty is your borders. You’re entitled to have borders. You shouldn’t offshore your medicine. You shouldn’t offshore your semiconductors. You shouldn’t offshore your entire industrial base and have it be hollowed out beneath you. You should not be dependent for that which is fundamental to your sovereignty on any other nation. And if you’re going to be dependent on someone, it darn well better be your best allies. Okay? And so that is a different way of thinking. It is completely different than the WEF” (Video)

Oh dear! It’s a good thing Klaus Schwab can’t hear that, otherwise he’d have a heart attack.

Canadian Prime Minister Carney also pointed out in Davos that “the existing world order is collapsing.” He also highlighted the plight of small and medium-sized countries, which now have to cope with pressure from the largest ones. The Canadian Prime Minister said that these states should join forces so as “not to be crushed by the rivalry of the superpowers.” It seems that these words refer most to the countries of the European Union, which in recent months have pursued a different policy as a group from what Donald Trump is trying to do.

Due to the many controversial actions of the US president, we are gradually reaching a situation where simply showing resistance to him is enough to gain popularity. Previously, Justin Trudeau’s popularity grew because of such a conflict (it was Trump’s fault, not Trudeau’s merit), and now Carney also received a lot of praise after his speech, although as a former banker, he is more reminiscent of Macron in terms of credibility.

Among other important statements from Davos, the following are also worth mentioning:

[1] Larry Fink (CEO of Blackrock) stated that tokenising assets is the only sensible decision and that next-generation financial markets should already be based on tokenised shares or bonds.

This proves that the elites have not given up the fight against cash.

[2] Christine Lagarde (head of the ECB) drew attention to the problem of wealth inequality. And indeed, this problem does exist, but Ms Lagarde has probably forgotten who fuelled this problem over the last decade through massive money printing and intervention in the financial markets.

[3] Javier Milei (President of Argentina) reminded us that the West could still have a bright future ahead of it, but that it needs to turn towards freedom. These words were probably directed at the United Kingdom, Belarus and Germany, where freedom of expression is being fiercely opposed. (See also: Article in Gefira)

Market situation at the end of January 2026

I. The Magnificent Seven lose their cohesion

Analysts are beginning to divide the Magnificent 7 into smaller subgroups. They talk about the “Fab 4” or “Mag5” – that is, the 4 or 5 companies from the group that continue to drive the market upwards, while the rest have become a burden. Only Alphabet and Nvidia outperformed the S&P 500 in 2025. The gap between Mag7 share prices in the second half of 2025 was enormous. 

Competition in the field of AI has become a wedge that divides the group. Amazon, Alphabet, Microsoft and Meta are spending hundreds of billions on AI infrastructure and data centres. Nvidia dominates the market for the chips needed to power these models. Apple and Tesla are lagging behind. Apple has been criticised for lower costs and slower AI development, while Tesla has suffered from slowing electric car sales. Nevertheless, the “magnificent seven” still have a huge impact on the market, accounting for about 36% of the S&P 500’s capitalisation.

Source: MSN

II. Withdrawal from defensive sectors

The defensive sectors of the US economy are currently the most undervalued relative to high-tech companies in history. Defensive sectors include companies whose services are in demand regardless of the state of the economy or consumer sentiment: healthcare, consumer staples, utilities, including electricity, water and gas companies, and the telecommunications industry. We observed similarly low valuations for defensive companies before the dot-com bubble burst in 2000. Investors were so obsessed with the internet craze that they forgot about the major sectors. The same is true today, with the difference that the above-mentioned glorious companies are benefiting from it.

III. Can precious metals continue to shine?

In 2025, the price of gold rose by 64% in dollar terms. Over the past 5 years, this growth has been 152%, and the price of gold is currently at its ATH (all-time high). Does gold have a chance for further growth? Let’s take the ratio of US stocks to gold. Every time gold reached its 1929 peak of 1.54 gold, it provided a solid foundation for growth in the gold market. 

Factors that point to a further rise in GOLD prices include geopolitical tensions, interest rate cuts by central banks, mistrust of the bond market and the weakness of the US dollar. Another such factor is high demand from central banks. In 2025, after a hiatus of almost 30 years, central banks hold more gold than US bonds. However, we must remember the dangers. These include a possible recovery of the dollar, the return of investors (at least temporarily) to the bond market, and young investors choosing Bitcoin over gold. It should also be noted that gold has grown by an average of 11% per year since 2000.

2025 was also a phenomenal year for silver. The metal rose 146% in dollar terms. This growth had a solid foundation, as it was driven by demand for silver in the economy and the limited availability of the metal. Another important factor was that the US classified the metal as strategic and China (the world leader in silver processing) restricted its exports. Is silver expensive now? At over $90 per ounce, silver is at an all-time high. However, compared to M2 (a measure of money in circulation that takes into account funds in current and savings accounts), this value is well below its historical peak. If the price of silver had reached a level similar to that of 2011, given the growth in M2, the price would be $97. But if it were the same as in the 1980s, an ounce of silver would cost approximately $531!

Silver therefore has potential for further growth. This may be driven by increased demand from industry, the aforementioned export controls from China, or the fact that the silver market is relatively small and demand for silver is high. Since 2000, silver has grown by an average of 10.4%. The 146% growth projected for 2025 is a significant deviation from the norm. It is also worth noting that the gold-silver ratio, i.e. the ratio of how many ounces of silver we can buy for one ounce of gold, is currently at a low level of 50. This indicates that silver has become significantly more expensive compared to gold over the last 30 years. Speculators, industrial lobbies and politicians, who would benefit from a fall in the price of silver, could have a negative impact on the price of the metal.

IV. Refinanzierung von US-Schulden

The high price of precious metals is mainly due to capital migration from bonds. The US debt will have to be repaid in 2026. This problem will be solved through refinancing, i.e. issuing new bonds (taking on new debt) to repay bonds that are approaching maturity. The last two times we saw a similar situation – during the GFC, the global financial crisis, and the “Covid recession” – interest rates were at 0%. Currently, interest rates are at 3.75%. The higher the interest rates, the higher the borrowing costs and the burden on the government, which is already enormous. In the current fiscal year 2026 (since October 2025), the government spent $179 billion in just two months to service its debt. This is the second largest expenditure after social spending.

 

V. Die Globalisierung des Renminbis

The dollar’s share of global reserves (black line) is falling in favour of gold. The decline in confidence in the US financial system will not go unnoticed by its biggest competitor, China. Beijing is expanding its financial payments network and developing an alternative to the US-led Swift system. The Middle Kingdom is lending more and more money to developing countries and encouraging international companies to issue bonds denominated in Chinese currency. About half of cross-border transactions in China are currently denominated in its own currency, compared with almost zero yuan share in such transactions 15 years ago. As a former member of the Chinese central bank said, the government wants the yuan “to be seen as a strong currency that is used more globally”. The yuan currently accounts for 8.5% of global foreign exchange transactions. That is a small amount compared to the dollar, which accounts for 89% of this category. However, the message is clear: China will fight to strengthen the role of its currency in international trade. This is another area in which Beijing is challenging the United States.

 

Gold does not belong to Italians

Nowadays, it is central banks that steer economies, not governments. A central bank should act in the name and for the benefit of the people, but the policies of all central banks, starting with their abandonment of the gold standard, only lead to our currencies becoming increasingly worthless as purchasing power declines. This can be seen, for example, in the US, where consumers can now buy less and less due to the particularly weak dollar.

Currencies are just pieces of paper that we are supposed to trust. We are supposed to trust the notes issued by central banks, but it is all just an illusion. Jacques Delors’ famous quote, “Not all Germans believe in God, but they all believe in the Bundesbank,” may no longer apply since the introduction of the euro, because the euro is not the German mark and today’s dollar does not have the same purchasing power as it did in the 1960s.

Trust in central bankers is declining. Politicians are also less willing to cooperate with them. Trump’s dispute with Powell is well known. Less well known is the fact that the current head of Poland’s central bank is going against government policy. And the example of Italy shows that where the ECB has a say, there is no freedom of decision-making and no trust in this central bank.

At the end of November, Senator Lucio Malan of the Fratelli d’Italia (Brothers of Italy) party, the party of Prime Minister Georgia Meloni, proposed an amendment to the draft budget. It was to be added that the gold reserves of the Banca Italia belong to the nation. The proposed amendment aimed to establish once and for all that gold is a national asset held in trust by the central bank for the benefit of the country. Those affected at the ECB immediately began to protest, and instead of the entry about “national ownership,” the law only included a confirmation that gold remains on the balance sheet of the Italian bank, which manages it within the Eurosystem.

This was no insignificant event, as Italy’s gold reserves are the fourth largest in the world and represent 14% of GDP. By comparison, Germany’s reserves represent 10% of GDP and those of the US 4%. We are talking about 2,451 tons of gold, which has been placed under the heavy hand of the bankers in their tower in Frankfurt am Main. If a crisis were to occur, the gold reserves would be “managed within the framework of the Eurosystem.” Another argument for being Eurosceptic.

 

 

 

Oh dear, Mr Trump!

Trump may have stopped the left-wing revolution, but his achievements as a top manager in the top position remain miserable: the US is running a record deficit and DOGE is ceasing to exist.

The first year of Donald Trump’s second term will soon be over. In January, the public watched with interest as the new president made statements about restoring national finances. Elon Musk and his DOGE were supposed to reduce waste, fraud and bureaucracy and optimize the government’s work. New IT systems were to be introduced, useless jobs abolished, and unnecessary expenses reduced. Musk ran across the stage with a chainsaw accompanied by Javier Milea (the Argentine president), and Trump said that DOGE was a revolution and that they would find hundreds of billions in savings and reduce bureaucracy, including the federal administration. In short: America will be great again!

However, reality proved cruel. October marks the start of a new financial year in the US and thus a new budget. The budget deficit reached a record high of $284.3 billion this month, which is $300 million more than during the Covid-19 crisis, a time when the entire economy was shut down and the world was turned upside down. Never before in US history has there been such a high budget deficit at the start of the financial year.

However, it is important to note that an increasing proportion of this is attributable to the rising cost of servicing the debt. At present, it already accounts for 19% of all revenue, and forecasts indicate that expenditure on servicing US debt will exceed all social programmes and transfers within 10 years. Therefore, it can be argued that DOGE attempted to clean one room without realizing that the entire house is dirty and the owner is constantly walking around in dirty shoes. The savings should have amounted to more than $200 billion, while audits showed that this could be four times as much. This means that not only did loud statements come to little, but in the end there was still a record budget deficit. Ultimately, DOGE ceased to exist after 11 months, even though it was supposed to function until mid-2026.

Hopefully Mr Trump manages world affairs better on the military front than he does on the economic front in his own backyard, otherwise… 

Why US stocks are rising

In 2006, the Bush administration passed the Pension Protection Act, which automated the American retirement plan, 401(k). Whereas Americans had previously been able to decide voluntarily whether or not to join the pension plan, after the new law was introduced, they had to explicitly state if they did not wish to do so. And since most people hardly ever check their contributions, participation in the program rose from 20% to 70%—an enormous cash injection for the stock market. Since in most cases 401(k) is a passive investment concept, i.e., the image of an index is purchased rather than stocks carefully selected through fundamental or technical analysis, the US stock market rose and continues to rise exorbitantly.

The danger is that if, for demographic reasons (declining US population, aging society) or economic reasons (higher unemployment), less money is thrown into the market, the market will begin to decline at a rapid pace as exorbitant sales are made.

Yes, there are numerous sellers of financial products who are currently dazzling us with their positive attitude toward the US economy. However, the stock market is completely overheated, especially in the US. At the moment, it is reminiscent of the dot-com bubble of 2000, especially since passive investment concepts now account for over 50% of the entire US stock market.

In addition, such concepts lead to large corporations being weighted more heavily due to automatic purchases. The best example was and is The Magnificent Seven, a stock index of seven large technology companies—Alphabet (parent company of Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla—that have, or rather had, a dominant position, as Nvidia currently dominated them all. The market became narrow. If Nvidia falls, they all fall with it. In Europe, it is no better: in Germany, SAP, Siemens, and Airbus alone account for 30% of the weighting among the 40 DAX companies – which, incidentally, also facilitates manipulation of the DAX by large speculators.

One thing is certain: automated investment processes are stupid; they also mean that when a bubble bursts, there will be hardly any time to react accordingly.

BRICS against the dollar

Do you believe that every central bank acts independently of other countries? That the currency you pay with every day means anything in the world? Well, francs or crowns do, but others… Anyway, central bankers from all over the world gather from time to time at their headquarters in Basel to set the course for all currencies, their appreciation or depreciation, at secret meetings. Yes, at secret meetings, which is not in keeping with the transparent, democratic world and Switzerland in particular. There in the tower of their bank (the headquarters of the BIS – the Bank for International Settlements) they pay their bills, plan the next crises, the next helicopter monies, the next bailouts. Yes, there are such circles and their history goes back to the times before the Second World War.

The headquarters of BIS, the infamous bank about which numerous authors such as Le Bro and Ronald Bernard wrote volumes. Source: Wikipedia.

Now some are stepping out of line: the BRICS countries are throwing down the gauntlet to the dollar, the king of all currencies, to which they have all had to submit up to now.

The absolute dominance of the dollar is beyond doubt because:

First

When the Second World War ended, the US economy undoubtedly became the most powerful in the world. In 1970, the United States accounted for about 40% of the world’s GDP. It was the only one left untouched after a major armed conflict and was able to use its position to introduce convenient rules for itself. For example, funds under the Marshall Plan (post-war reconstruction of Europe) were nominated in dollars.

Second

The US has created a financial system based on its currency. Until its link to gold was severed, every other currency was firmly tied to the dollar. This meant the need to hold dollar reserves. For example, the UK had up to 70% of its reserves in US currency at the time.

Third

The International Monetary Fund and the World Bank are institutions dependent on the USA (30% of the dollar reserves gave the USA a decisive vote). Therefore, loans in dollars were granted to countries in a difficult financial situation. In addition, they often had to open their markets to American exports, which only strengthened their dependence on the dollar.

Fourth

Until recently, all commodities were traded on the stock exchanges and always denominated in dollars, be it gold or oil, it doesn’t matter. All of them.

However, the era of globalization set in motion in the USA has begun to have negative effects. One of these was the unprecedented economic growth of many countries, especially China. They all increased their production and trade, and so their currencies became more and more relevant. In the 1980s, the dollar was the currency of 80% of trade accounts. Later, this share declined: from the 1990s to today, it has fallen from 70% to 54%. JP Morgan predicts that it will be around 50% by 2030.

A similar trend can be observed by analyzing the share of individual currencies in global reserves. The dollar’s dominance peaked at the beginning of the 21st century, when it accounted for around 72% of all reserves. As you can see in the chart below, this share has gradually declined over the last two decades.

Source: Arcadiawm.com

As you can see, the majority of the new shares of currencies other than the dollar are due to the development of the economy in almost the entire world (“Other” in the chart). This is the effect of globalization and the growth of wealth in many countries. Interestingly, the Chinese yuan only started to play any significance in 2017.

The growing popularity of the yuan can also be seen even more clearly by analyzing SWIFT data, i.e. the American payment system used worldwide: In 2023, the value of transactions made in this currency increased dramatically. This made the yuan the 4th most popular currency in this system. This is indirectly due to the sanctions imposed on Russia for its invasion of Ukraine. This forced the Russians to bypass the dollar, which is why the yuan and ruble currently account for around 90% of the country’s trade with China. To this should also be added bilateral agreements with Brazil and Argentina, which were signed at the time and have included the yuan in trade between these countries.

However, one of the main reasons for the popularization of the Chinese currency is the activity of the BRICS. This bloc accounts for 31.5% of global GDP, 40% of the population, 40% of the oil market and 72% of the rare earths market. The participating countries cooperate with each other through investment in infrastructure and trade. One of the group’s most important assumptions is the pursuit of a multipolar world order and thus a world in which the dollar is no longer the most important currency. Within the framework of the BRICS, institutions were created that represent alternatives to the World Bank and the International Monetary Fund. These are the New Development Bank and the Contingent Reserve Arrangement. Their business is very similar to their Western counterparts, but there is one fundamental difference. Loans are granted in local currency, which reduces dependence on the dollar. As a result, 69% of trade between the BRICS countries will bypass the US currency in 2025.

In addition, BRICS countries are buying gold instead of dollars. Recently, it has been the very countries (with China in the lead) that have been most responsible for global gold purchases, mostly directly from local miners, further reducing dependence on the dollar. It is worth noting that the BRICS countries account for 20% of global gold bullion supplies. Therefore, it is obvious that many countries (including the BRICS) are trying to have as many gold reserves as possible, which should further boost demand for this metal.

What’s more: In October 2025, the Moscow Precious Metals Exchange was launched on the initiative of the BRICS. It enables calculations in gold, platinum, diamonds and rare earth metals. It bypasses the SWIFT system and the London Metal Exchange system. This decision makes countries such as Russia and China independent of possible sanctions and supports trade in commodities and currencies of the BRICS countries.

In addition to the newly opened Moscow Exchange, there is also a Shanghai Exchange specializing in gold and silver, which supports 30% of gold trading in the yuan. A merger with a newly opened organization could create a common market for metals within the BRICS, making the bloc further independent of Western influence. These events only emphasize that the role of gold will only increase in the coming future.

A thorn in the side of the Americans and Western bankers is the fact that the BRICS are using their control over 72% of rare earth element (REE) reserves as leverage against the West. The recent information about Chinese restrictions on the export of these commodities and Trump’s threats that followed only confirm this.

China, a tycoon in this market and the most important member of the BRICS, is also trying to establish alternative supply chains in order to circumvent Western influence as broadly as possible. One example is the Middle Kingdom’s investments in Africa. The Dark Continent is a kind of gateway to the implementation of the de-dollarization strategy, as there are huge, unknown REE deposits (up to 10% of global supply in the next 5 years). In Angola, for example, a new mine is being built. From 2026, it is planned to produce 20,000 tons of mixed rare earth carbonate (MREC) per year, which will cover 5% of the global demand for magnetic metals. Lobito Corridor (the Banguela railroad) will be used for export. It is an infrastructure financed by China as part of the New Silk Road (BRI). The key here is the fact that it completely bypasses the routes controlled by the West, facilitating trade with China and Russia. Therefore, China is building a new network of dependencies and cutting off its competitors from access to attractive markets in order to obtain economically critical minerals. We would not be surprised to see Angola join the BRICS in a few years, as well as Nigeria, where Africa’s largest REE processing plant is located.

To summarize: The emergence of a multipolar world order is very likely, even if the dominance of SWIFT, the BIS, the IMF and similar US-dependent institutions will continue for some time to come.

Switching the Points

One of the very important outcomes of the SCO (Shanghai Cooperation Organization) conference held on 31 August – 1 September was the deal made between Moscow and Beijing about constructing and completing by 2030 the Power of Siberia 2 pipeline (the Power of Siberia 1 is already in operation), which will run through Mongolia. The pipeline will be built by Gazprom and it will provide the Middle Kingdom with natural gas extracted – among others – from the same fields which up to quite recently supplied Europe with this resource.

The consequences of this move are neither to be overlooked nor underestimated. Waging a crusade against Russia, Europe deliberately and purposefully cut itself off from Russian gas. Long before the conflict in Ukraine broke out, the leaders of the Old Continent for years kept complaining about the continent’s dependence on Russian gas. For years they they would make the cooperation for Gazprom ever more difficult. Then came the war in Ukraine and an eruption of Russophobia. Europe turned its back on Russian gas while the United States made sure that no one would think about reversing course: as we know the supply pipelines – NordStream and NordStream 2 – were sabotaged.

Europe is still purchasing some Russian gas through middlemen, but generally the Old Continent has switched to American LNG, which is more expensive as it requires shipment, liquefaction, and vaporization. The Russia-China deal will make it impossible for Europe to return to purchasing Russian gas: the Chinese market will swallow up any quantities of it. We are witnessing an epic change: the two NordStream pipelines are about to be replaced by the two Power of Siberia pipelines, redirecting immense amounts of gas from Europe to Asia. Simultaneously, since the Power of Siberia 2 will run through Mongolia, it is Mongolia that will greatly benefit from the Moscow-Beijing deal rather than Poland or Ukraine, through which the pipelines Yamal and Druzhba/Brotherhood run. Russian gas was supplied to Germany and Italy. It was cheap, cheaper than its American alternative, and so both these countries benefited from it a lot economically. All of this is in a complete reversal. What was done during the SCO session is like switching the railway points: the tank cars full of gas that used to be headed for Europe will all soon be headed for China.

Just as over time European and Russian economies will diverge one from the other, those of Russia and China will become closer and closer. The pipelines supplying Europe were in operation for decades, long before the collapse of the Soviet Union. With them gone, a new economic alliance between Moscow and Beijing will be forged. We can only wonder what European leaders think about this change. Sure, on the face of it they are still belligerent, but are they in their heart of hearts? If they are clever enough, they must be smelling a rat. The war that they had hoped to win is going sour, the sanctions that they had thought would coerce Russia into submission backfired, while the economic situation of the Old Continent is deteriorating with every month. Still, once they all invested so much hatred and scorn into Russia, they simply cannot put into reverse. Such is human psyche. They must wage their crusade to the bitter end.