Greenland Tensions: How to Protect Your Capital Against Rising Uncertainty
Sectorial Flow Analysis
Hello Traders,
The “Greenland Crisis” has escalated into a major diplomatic confrontation between the U.S. and the Kingdom of Denmark. Following the appointment of a U.S. Special Envoy to Greenland in 2025, President Trump has intensified rhetoric regarding the annexation of the territory. The U.S. views Greenland as a “national security necessity,” citing its strategic position for the “Golden Dome” missile defense system and its proximity to Russian and Chinese activity in the Arctic.
Greenland and Denmark have rejected all offers, sparking “Hands off Greenland” protests across Europe. In response, the U.S. has threatened to treat the island’s status as a trade issue, signaling that support for Danish sovereignty could lead to punitive economic measures.
The Mineral Mandate: Why Trump Needs Greenland
While the administration officially frames the Greenland interest as a defense priority, the underlying economic driver is the race for critical minerals.
China’s Monopoly: China currently controls the vast majority of the world’s rare earth element (REE) processing. Greenland holds the world’s eighth-largest reserves of these minerals, which are essential for superconductor chips, EV batteries, and advanced military hardware.
Supply Chain Independence: To fuel a “Made in America” industrial revival, Trump seeks direct control over raw materials to bypass Chinese supply chains.
Untapped Potential: As Arctic ice melts, deposits of lithium, cobalt, and graphite are becoming more accessible. Greenland holds 25 of the 34 minerals classified as “critical” by the EU, making it the ultimate prize in the green energy and tech wars.
The Legal and Strategic Reality: The “No-Buy” Path
Many are asking if the U.S. can achieve its goals without a formal purchase. The research suggests that the U.S. is already leveraging a deep legal and economic architecture to secure its interests without a change in sovereignty.
1. The Legal Foundation: Defense Agreements
The U.S. does not need to own Greenland to station troops or build infrastructure. Its rights are anchored in two primary documents:
The 1951 Defense of Greenland Agreement: This treaty, signed within the NATO framework, established “Defense Areas” (like Pituffik/Thule). It grants the U.S. the right to construct, maintain, and operate facilities, and to station personnel for the collective defense of the North Atlantic.
The 2004 Igaliku Agreement: This updated the 1951 treaty to give the U.S. unrestricted access to Pituffik Space Base. Crucially, it established that while the U.S. must “consult and inform” Denmark and Nuuk regarding expansions, the core military presence is functionally permanent as long as the treaty stands.
The “Golden Dome” Loophole: Under these agreements, the U.S. can argue that installing the space-based interceptors and advanced sensors for the Golden Dome system (announced in May 2025) is a “modernization” of existing defense areas. This bypasses the need for a total annexation by framing the expansion as a necessary technical upgrade for NATO’s security.
2. The Mineral Mandate: MOUs and Trade Power
While the U.S. has military rights, it does not have “anytime” rights to minerals. All mineral rights are governed by Greenland’s Mineral Resources Act (2009/2023). However, the U.S. is using “Economic Statecraft” to bridge this gap:
The 2019/2024 Memorandum of Understanding (MOU): The U.S. Department of State and the Government of Greenland previously signed MOUs to jointly survey rare earth elements. While these were scientific, they provided the U.S. with the “geological map” of where the 25 critical minerals (lithium, cobalt, etc.) are located.
The “Price Floor” Strategy: Following Trump’s January 14, 2026 proclamation, the U.S. is considering subsidizing a “price floor” for minerals extracted in Greenland. This would make it financially impossible for Greenland to say no to U.S.-backed mining projects (like the Tanbreez or Kvanefjeld sites) even without a formal takeover.
Supply Chain Sanctions: By threatening 25% tariffs on European allies who block U.S. mining interests, the administration is effectively using trade as a “soft annexation” tool to force Greenland’s mining sector to prioritize American buyers over Chinese ones.The Dollar and the Tariff War
The Dollar and the Tariff War
The U.S. dollar is currently caught between two opposing forces:
Inflationary Pressure: Proposed 10% blanket tariffs—and specifically 25% threats against European allies—are expected to spike U.S. inflation. This forces the Federal Reserve to keep interest rates high, which typically strengthens the dollar as it attracts foreign capital seeking higher yields.
Market Volatility: Conversely, if these tariffs trigger a “hard decoupling,” investors may flee to gold or other safe havens, causing short-term dollar weakness.
Europe’s Response: The EU is preparing a massive retaliation package, including €93 billion in counter-tariffs. Leaders like Emmanuel Macron and Keir Starmer have called the U.S. tactics “blackmail.”
Sectors Benefiting from Rising Uncertainty
In a climate defined by trade wars, territorial disputes, and supply chain fragmentation, investors are shifting toward “defense-first” portfolios. We see the following sectors poised to benefit most from the current volatility:
