Gold Reacts to a Dangerous World!

03 Jan

Gold Reacts to a Dangerous World!

Urgent Recommendation to Take Defensive Action!

Always a sensitive barometer and the financial world’s go-to sanctuary in a crisis, gold wasted no time reflecting the dangers implicit in the US-Iranian face-off.

Already in a bull market that began last summer, gold surged higher throughout December.  

Now, with the escalation playing out in Iraq and with threats and taunts being hurled from one side of the globe to the other, it has climbed even more.  On Friday (1/3) gold shot up more than $24 an ounce to finish at $1552.40.

Silver’s move has been more than impressive:  it has climbed more than a dollar an ounce over the last month to finish Friday at $18.05.

We consider the geopolitical situation to be grave.  Price action shows the markets agree with our assessment.  Events are at a point where they can easily spin out of control.  The US embassy has asked Americans to leave Iraq.  Iran has called the killing of General Suleimani an act of war.  We recommend you speak with an RME Gold professional about taking defensive measures now to protect your wealth.

As we wrote here in 2018,If things get hot over the Strait of Hormuz, it will realign the major powers of the world, creating explicit new alliances and sorely test America’s geopolitical dominance.  It will change the dollar’s role in international trade and send energy prices to crippling highs.”  (See our post Watch This One Carefully, 12/4/18).

Last fall we noted that such violence “will send gold prices to uncharted new highs.

“That’s because gold is the world’s currency of choice in times of crisis.

“Our point is simply that you can’t know exactly when someone will launch a deadly attack and start a war.  

 “Or decide to close the world’s shipping lanes.”

We wrote more about the Gulf shipping lanes in April.  See Temperature Rising in the Persian Gulf, (4/22/19), in which we noted we are moving to more than a war of words in the region:

 “It is normally in Iran’s interest to see the shipping lanes open. But there is no telling what Iran will do in extremis.  The threat to shut down the passageway is the only defense Iran has to any kind of attack.

The Strait of Hormuz is a sea-lane between Iran and the Arabian Peninsula. It links the otherwise landlocked Persian Gulf with the Gulf of Oman and the Arabian Sea, providing access to the world’s oceans.

“Twenty-one miles wide at its narrowest, the waterway is a critical chokepoint.

“The Strait accounts for nearly 20% of global oil trade, with Iran, Iraq, Kuwait, Saudi Arabia, Qatar, and the United Arab Emirates all relying on the Strait to ship their oil. Most of these shipments have Asian destinations: Japan, India, China, and South Korea.

“Now, imagine you run a powerful company that owns and operates supertankers that sail through the Persian Gulf. If hostilities break out and the Strait of Hormuz is shut down – even for a day – will you authorize your ships to sail in those waters? 

“Imagine you insure oil tankers. You will have very strict terms to suspend coverage for a company foolish enough to ship in the waterways of warfare.

“Either way, the flow of oil is interrupted.  Geopolitical alliances begin to shift as countries weigh their self-interest and seek advantage from an international incident.  Of course, oil prices explode.

“As does the price of gold.”

It is worth reiterating, that we can’t know exactly how things will escalate.  The range of possible responses from Iran is wider than most people imagine, ranging from military options and a standoff in the Strait, to ship sabotage and other covert options.  Larry Johnson, the former CIA analyst, reminds us of Iran’s “robust” cyber warfare capability that may have targeted US banking sites years ago.  In any case, one widely followed commentator who keeps a close watch on Iran says war is about 80 percent certain.  His view is that any form of Iranian retaliation for the death of Suleimani will be used as a US pretext to attack Iran.  Another warns of war “from the Mediterranean to the Indus.”

We do not know.  But we do know from long experience that things can move very, very fast.  

Do not delay implementing a sound plan to protect yourself and your wealth with precious metalsIf you detect some urgency in this recommendation, you are correct.  We will just warn once again that the Persian Gulf is dry tinder, which once sparked could lead to a dangerous conflagration.  

Gold and silver go up in response to dangerous geopolitical events, just as they do in response to economic mismanagement by Washington.  

Let us help you prepare for the fallout from our dangerous world and from Washington’s economic irresponsibility.  Resolve to take action now and contact us at once.