USAGOLD/Peter Grant/09-05-17
Gold rebounded from modest intraday downticks after filling the gap that was left yesterday. The yellow metal remains elevated by geopolitical tensions that continue to ratchet higher, as well political uncertainty here at home.
Gold set another new high for the year yesterday at 1338.82 after North Korea tested a rather larger nuclear device. It was reportedly an order of magnitude greater than previous tests and there is speculation it may have been a hydrogen bomb.
“Any threat to the United States or its territories including Guam or our allies will be met with a massive military response, a response both effective and overwhelming,” responded U.S. Secretary of Defense Jame Mattis. According to Foreign Policy magazine, the threat makes war “more likely than ever.”
President Trump tweeted that the “The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea.” In addition, the President has apparently green-lighted the sale of a “substantially increased amount of highly sophisticated military equipment” to both Japan and South Korea.
Reports today center on North Korean movement of a missile toward the coast, presumably for another test flight. If that missile ultimately heads toward Guam, the risk of a U.S. military response is substantial.
We seem to be hurdling along a rather ominous path at an ever-increasing rate of speed. Unless calmer heads prevail, this has the potential to devolve into a global catastrophe.
Jeff Currie, Goldman Sachs chief commodities strategist, reminds us that gold is the true “geopolitical hedge of last resort.” ZeroHedge summed it up thusly:
The distinction of “electronic” or paper gold versus physical may be one the cryptocurrency community will soon be forced to learn, especially if North Korea does carry out, as it threatened over the weekend, an attack using an Electro Magnetic Pulse which could promptly empty all those bitcoin “vaults.”
If war should break-out, physical may become very difficult to get, which would push prices up dramatically. The time to lay in your hedge is before the black swan takes wing.
