A lot of money is riding on Venezuela, Greece and Denmark. How smart is that money?

Several Wall Street firms and S&P 500 energy players have been taking positions in Venezuela.

The reason? Gold. Gold in massive amounts as yet largely untapped. And energy, in massive but so far barely surveyed amounts.

However, Venezuela is one of a number of emerging markets now in trouble. There is a run on the currency, a banking crisis, and an imploding economy.

Greece sources are reporting renewed German interest in the seas off Crete. Berlin appears to be at least partly bankrolling a major Norwegian exploration survey there. American engineers are crawling all over at least five Greek islands.

The reason? Energy, and rare earth minerals.

However, the seismic nature of Crete, Kefallonia and indeed the entire SE Med region add to the risk factors. And as The Slog predicted in mid-January, the need for another Greek haircut is making a laughing stock of the Samaras government…and the EU elections in May will see an enormously divisive swing to harder left and right Parties.

Both Owl Investments and Goldman Sachs have taken massive positions in Denmark.

The reasons? Denmark’s strong claim to oil and gas under the Arctic….because many expect the progress of ‘global warming’ to render exploitation of that resource easier.

However, I just happen to be fairly certain that such hopes will be dashed. I become less convinced of global warming with every year.

What it seems to me we’re looking at here is what you might call commodity expectation. This leads to speculation and then, if all goes well, to further things ending in ation: estimation, exploration, exploitation, and then wild celebration. The following much-used chart shows the process graphically:

The smart money walks in on tiptoe to buy expectation stock, gets some solid geophys, and either sells on to mezzanine investors, or stays long on the chance of flogging a lower-risk investment to the institutional sector.

It’s all very clear in theory. But the key assumption is that conditions will allow estimation to turn into eventual celebration.

In these particular cases we are talking about cult-death, socialist chaos, volcanic activity, and climate change. None of these are renowned for their predictability.

And just to make matters worse, within weeks of the Fed ‘tapering’ (it may or may not be doing that, but the markets think it is) we suddenly find a once-promising emergent market called Ukraine going tits up on several fronts. Both of which can only lead to more fearful investors backing away from high risk.

When asked towards the end of his life what the most difficult challenged for politicians was, Harold Macmillan replied, “Events dear boy, events”.

In Frankfurt, Draghular is busy manufacturing a false-flag ClubMed bonds recovery. In Kiev, daft politicians at all levels are egging the combatants and geopoliticians on to yet more bad decisions in the context of a fiscal meltdown. As regards Greece, the outside world may be asleep to the way things are heading there, but tempers will both fugit and become frayed.

I don’t foresee a bubble here. But I do suggest that, very possibly, there are some whose greed has tempted them into a discomfort zone to which they are unaccustomed.

Stay tuned.

Related at The Slog: The Four Horsemen of the Ukraine