My reason for throwing the spotlight on gold today — aside from a potential looming crimp in gold supplies — stems from my belief that a shooting war with North Korea is looking increasingly likely.
As terrible as that reality would be, I don’t believe you can afford to go through life with your heads in the sand. Especially as the picture continues to deteriorate.
As Bloomberg reported yesterday:
‘President Donald Trump said the U.S. is prepared to use “devastating” military force against North Korea but encouraged the world to work together to end the country’s nuclear program as he imposed new sanctions on the country’s banks.
‘“We are totally prepared for the second option — not a preferred option — but if we take that option it will be devastating I can tell you that,” Trump said during a joint news conference Tuesday at the White House with Spain’s Prime Minister Mariano Rajoy. “For North Korea that is called the military option. If we have to take it we will.”’
Despite the inflammatory words coming from both sides of the Pacific, global markets are remarkably complacent. And though gold has edged up, it’s hardly soaring.
From The Australian Financial Review:
‘If there is going to be a war between the United States and North Korea someone other than President Donald Trump or Kim Jong-un might have to tell Wall Street.
‘At the moment investors couldn’t care less, which is odd.
‘Indeed, if the moves in sharemarkets are any guide no one seems to be listening to the barbs being thrown around by the two leaders right now.
‘It’s all just viewed as cheap trash talk on Twitter or something out of a bad spy movie.’
Granted, both Donald Trump and Kim Jong-un would fit right in on the set of a cheap spy movie. And their Twitter exchanges are indeed akin to cheap trash talk.
But they’re not actors. And they’re not angry teens engaged in threats of ‘see you in the carpark after school’.
Donald Trump is Commander in Chief of the most powerful military the world has ever known. And Kim Jong-un is sitting on a sizeable — and growing — nuclear arsenal. One that may now contain hydrogen bombs.
We can only hope for a peaceful long term solution. A solution that sees the trade sanctions take hold and brings an end to North Korea’s nuclear dreams. But if things take a sharp turn for the worse, global markets will lose their complacency in a hurry. And gold, the go-to safe haven, is likely to take off.