Nestled between the Pacific Ocean and the Caribbean Sea, the small Central American nation of Nicaragua has experienced political turmoil for nearly two hundred years. Whether at the hands of American mercenaries of war in the 1850s, the U.S. marines from 1912 to 1933, or the US-backed Somoza Dynasty, which lasted from 1936 to 1979, Nicaraguans have become accustomed to living in volatile political climates.
However, when one of Nicaragua’s left-wing Marxist revolutionary fighters, Daniel Ortega, came to power in the 1980s, many thought things would be different. Voted out in 1990, he captured power again in 2006 and has served as the country’s President ever since. After being decried by the international community following protests that turned bloody in 2018, the Nicaraguan President isolated himself. With strong ties to Cuba and Russia, the U.S. wants to curb Ortega’s influence. This October, the U.S. Administration announced harsh sanctions targeting aspects of the country’s gold mining sector (read more here).
Nicaragua Gold: Americans Target Ortega’s Cash Cow
Gold and the growing rift with Russia are at the heart of the latest sanctions against Nicaragua by the United States. Regarding reliable sources of income, tax revenue from gold production is near the top for Ortega.
The history of US-backed political rulers and rebels in Nicaragua is straight out of an adventure novel. Even the Spanish, who first began to colonize Nicaragua in the early 1500s, came for gold.
Investors Must Factor in Political Risk
Understanding the historical relevance of any country’s political past can help investors gauge the level of geopolitical risk involved. As speculators and investors, the risk typically increases when we go abroad, particularly to third-world countries. Mining explorers have almost been forced to venture into less familiar regions to explore and mine the precious metal as high-grade gold deposits have become extremely difficult to find.
Enjoy our latest podcast (above) to learn more about U.S. intervention in Nicaragua and Daniel Ortega’s unlikely rise to power.