Digesting Davos

26/01/2026

Davos served as confirmation of an emerging narrative, marking a clearer acceptance of what risk now represents in a world where fragmentation, persistent inflation, and geopolitical friction are rapidly becoming core assumptions.

The speeches from both Trump and Carney were among the more consequential moments of the week. For investors already contemplating portfolio adaptation, they reinforced the need to shift from theorising to practical action and highlighted the risks inherent in delay.

Viewed through a broader lens, the market response around Davos fits a pattern already underway. As outlined in New Metals Standard – Entering 2026, the defining risk is the erosion of trust, coordination, and partnership underpinning global supply chains, pricing mechanisms, and capital allocation.

President Trump’s intervention came against a backdrop of elevated tension, with allies already unsettled by the Greenland episode. Attention was focused less on policy specifics than on what his remarks would signal about reliability, intent, and the durability of existing alliances. While the immediate threat of force over Greenland was removed, deeper questions were left unresolved. The comments that proved most consequential were made during a widely circulated interview alongside the Forum and related to the military sacrifices of allied nations.

Carney did not defend the existing system. He framed adaptation as unavoidable and delay as a strategic error. He provided a pragmatic, hard-headed message that cut across political persuasion. There was no lament for what had been lost, only a focus on recognising the structure of what is emerging and acting accordingly.

That shift became evident as the week progressed. Initial price action reflected anticipation and positioning around expected events, but conviction only emerged once uncertainty around direction began to clear. The result was not a uniform market response but a series of differentiated moves that became clearer when viewed asset by asset.

The behaviour of the U.S. dollar provided an important anchor. Rather than attracting defensive flows, the dollar weakened steadily through the week, with no relief rally. The move was orderly, consistent with marginal diversification rather than panic. Rising precious metals alongside equity markets that absorbed volatility and rebounded, and a softer dollar, point to a reassessment of monetary and institutional confidence, rather than a conventional flight to safety.

Precious metals provided the clearest signal. Silver’s early impulse failed as attention peaked around political headlines, but the decisive move came later when prices broke through the $100 level and held. Gold told a complementary story. It neither spiked nor retraced, instead grinding higher through the week, holding just below $5,000 into the close, and breaking through that level this morning, consistent with deliberate allocation rather than fear-driven hedging.

Equity markets provided an important counterbalance. While volatility increased and early-week selling reflected uncertainty, losses were recovered and the broader uptrend remained intact. This was not wholesale de-risking but selective portfolio adjustment. That resilience has been evident for some time. Previous concerns around the narrow composition of the rally, particularly its concentration in large-cap technology, have not translated into sustained pressure. Instead, the current environment increasingly supports a gradual broadening of opportunity. Areas such as mining and oil and gas appear well positioned, reflecting both their cash-generative profiles and the growing strategic value of secure supply. Consolidation is likely to remain a feature, given balance sheet strength and the scarcity of high-quality assets. Defence-related equities similarly stand to benefit as spending priorities adjust to a more fragmented and security-conscious global backdrop.

Among cyclicals, energy markets were focused less on political headlines and more on balancing a dense set of competing inputs, including extreme cold temperatures across parts of the U.S., renewed speculation around Iranian intervention, and the latest supply and demand signals from the IEA. Brent crude traded unevenly early in the week before resolving higher and holding those gains. In a longer-term context, the move reflects a market increasingly questioning whether last year’s bearish framing still applies.

Industrial metals diverged. Copper, already anchored in a well-established structural narrative around supply tightness and electrification demand, largely ignored Davos altogether. The longer-term uptrend remained intact, and the week extended rather than redefined it. Aluminium, by contrast, proved more sensitive to framing. Although the trend was constructive heading into the week, conviction had been uneven. By the end of the week, prices had resolved higher and held.

In a world where trust is fragmenting faster than capacity can be rebuilt, price behaviour is increasingly shaped by security considerations rather than growth narratives. This does not imply linear outcomes or insulation from drawdowns, but it does alter how risk is expressed and how capital is allocated. Metals continue to attract capital as the market structure through which risk is priced evolves.

Davos did not introduce this framework. It reinforced it. The market response that followed reflects a growing acceptance that these conditions are not transient. They are the operating environment.

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