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Last Updated on: 17th April 2017, 01:35 pm
This past week saw troubling new geopolitical developments on several fronts. In the escalating war of words between the United States and North Korea, the North Koreans pledged that they are ready for either a nuclear or full-scale conventional war with the U.S. and its regional allies. Former ambassador and one-time New Mexico Governor Bill Richardson called this the most dangerous time he has seen in the Korean Peninsula.
In Turkey, President Recep Tayyip Erdogan narrowly pulled off an April 16th referendum giving him authoritarian and dictatorial powers that now make him the most powerful person in the history of Turkey since Kemal Ataturk founded it from the ashes of the Ottoman Empire following the First World War. Relations with both the United States and European Union are now on a low not seen since the Second World War.
In Switzerland, the country reeled from being included on the U.S. Treasury's watchdog list for currency manipulation again. The difference is that now they are in danger of stiff penalties from the new administration's “America First” agenda.
These are all too clear reminders for why you need gold as a hedge in your retirement portfolio. With the increasing geopolitical tensions in the world today setting the stage for financial and market turmoil, gold makes sense in an IRA.
U.S. and North Korea On Collision Course in Korean Peninsula
The situation between the United States and North Korea continued to deteriorate and escalate towards potential military conflict this past week. Saturday saw the rogue state leader Kim Jong Un watching, laughing, clapping, and celebrating over a lavish military parade in Pyongyang. Defiance to the U.S. and international community demands from the top regime and military commanders abounded. Senior Regime Official Choe Ryong Hae warned ominously:
“If the U.S. provokes recklessly, the revolutionary forces will take an annihilating strike. North Korea is ready for a nuclear or full-scale war if the U.S. wants it.”
Meanwhile the world was watching to see what new military hardware and missile technology the North would display. East Asia Nonproliferation Program Director Jeffrey Lewis from the Middlebury Institute of International Studies at Monterey commented that the pariah state had paraded a greater amount of new weapons systems than it previous parade:
“The North Koreans are committed to deploying a credible nuclear deterrent that is capable of deterring an attack and repelling an invasion. We saw a lot of the new systems they are developing to make good on that commitment.”
North Korea's dictator Kim Jong Un has increased the speed of the nuclear program development of North Korea since the point when he came to power toward the end of 2011. He has pushed for longer and farther range missiles to carry ever more powerful conventional and nuclear weapons. Already his regime boasts rockets which can strike either Japan or South Korea with up to 20 functioning atomic bombs. If that were not bad enough, now his country is determined to construct a long enough range missile to strike Washington, D.C. carrying a nuclear warhead.
The U.S. Secretary of State Rex Tillerson declared on April 9th that America held the greatest concern over North Korea's “significant advancements in delivery systems.” The rogue state already has its working Taepodong-2 missile that can hit any place in the United States. Analysts maintain that the missile is well-suited for putting satellites into space but so far not for the delivery of nuclear warheads.
The bigger threat to world peace is the as of yet untested KN-08. This intercontinental ballistic missile can be trucked by road and possesses an intimidating 7,100 mile (11,500 kilometer) range that could hit many large American cities. Earlier this year, North Korea's Kim announced that they were in the final stage of developing and test firing their ICBM. President Donald Trump in the U.S. responded by tweet: “It won't happen!”
The most recent test missile fired was yesterday Sunday, April 17th. It was not a success, yet the regime under Kim has successfully demonstrated both intermediate and short range missiles over the last several years since assuming power. In his military parade Saturday, several new ICBMs were on display besides the KN-08.
Worse news still is that the Punggye-ri nuclear test site area has been examined by the 38 North program begun by the School of Advanced International Studies at the John Hopkins University. Their review of the commercial satellite imagery from the site demonstrates nuclear test preparations' activity consistent with an imminent nuclear test.
The tensions have been rising since the American administration dispatched the USS Carl Vinson to North Korea and promised the U.S. would even act alone in dealing with North Korea should the country move forward with another either ballistic missile or atomic bomb test. President Trump informed White House reporters this past Thursday:
“North Korea is a problem. The problem will be taken care of.”
The Chinese backers of North Korea have become worried by the escalating tensions and threats going back and forth between the U.S. and North Korea. China's Foreign Minister Wang Yi called for calm Friday:
“to stop provoking and threatening each other and not to make the situation irretrievable. Once a war really happens, the result will be nothing but losing all round and no one could become a winner. No matter who the nation is, if it continues to provoke wars in the Peninsula, it has to bear this historical responsibility and pay its price.”
With the USS Carl Vinson Aircraft Carrier Battle Strike Group now close at hand, and North Korea imminent to test another atomic bomb, the potential for conflict in the Korean Peninsula is now the greatest it has been since the end of the Korean War nearly 65 years ago. Now is a good time to learn the gold IRA rules and regulations and take steps to protect your investment and retirement portfolios with physical gold.
Turkey's President Erdogan Becomes Most Powerful National Leader Since Founder Ataturk
April 16th saw the long-awaited referendum vote in Turkey regarding the massive expansion of presidential powers for Turkish President Recep Tayyip Erdogan. The Turkish people narrowly approved the dramatic shift in Turkey's future and direction that this referendum entails. This result sets in the constitution the transformation of a presidential position once ceremonial in nature to the center of authority in the whole Turkish government. Western analysts and observers call this power grab a move to one man rule without checks and balances.
Thanks to this vote, Turkey's greatest strongman since founder Mustafa Kemal Ataturk first established the nation is likely to be the president of Turkey through (or even past) 2029. As now-head of the executive branch of government without an important post of prime minister left to water down his authority, he gains the ability to issue legally binding decrees. Erdogan can now write the budget, appoint highest court judges and important ministerial officials directly, and dissolve parliament whenever it suits him. He also has obtained the power to declare states of emergency that suspend all common freedoms and rights. Erdogan said of this in his victory speech:
“Turkey is moving to introduce the most important government reform in its history.”
Yet the vote showed he only won with 51.3 percent versus 48.7 percent. Fully three separate opposition groups are contesting a questionable impact on the vote where the High Board of Elections approved a large number of envelopes and ballots that did not contain an official stamp. The head of this (now more than ever) deeply-divided nation will rule as a one man autocrat, hindered only by a weakened parliament that now has limited oversight over the presidency. They can not begin an investigation of either president, ministers, or deputies without a supermajority comprising minimally 360 votes out of now 600 members.
This matters on two levels. Turkey is an important G20 member state that has been dogged by militant and terrorist violence as well as political intrigue for years. Tourism and the economy have suffered significantly from activities that included the failed military coup last July to the resulting government retaliation against the media, civil service, and military. Last year the country forfeited its important investment quality grade of credit rating.
On the level of Turkey's relations with the European Union and the United States, these have already been suffering recently and are more likely to deteriorate even further now. Most of the remaining hopes Turkey had for joining the European Union were dashed by this referendum victory that the EU member states have called a naked power grab and blow to Turkey's democratic institutions. The EU recently stopped Turkish ministers from campaigning for the Erdogan position on the referendum in a famous blow up between the Netherlands, Denmark, Germany, and Austria versus Turkey.
Meanwhile the United States has counted on Turkish help to stop the Islamic State. Yet Turkey is also cross with the U.S. for its support of Syrian Kurdish fighters in the struggle. The situation with Turkey is an increasingly dangerous one that bears close watching. It is a reminder that gold outperforms traditional asset classes during market crisis periods.
Switzerland Under Threat from US Treasury for Manipulating Its Currency
It is no secret that the new American administration has been coming out hard against friends and foes alike. Switzerland is one such example of a nation long friendly with the United States that has now run afoul of the Treasury Department for interfering in the currency markets regarding their Swiss franc currency and exports.
Because U.S. law requires that the Treasury Department report two times per year on which of its important trading partners are playing their currencies, the new report came out Friday. Switzerland joined the list of potential currency manipulators last year in such uncomfortable company as China. This was because of the numerous currency market interventions and consistent trade surplus Switzerland has run with the United States. Any nation considered to be pursuing unfair trade practices with the U.S. is increasingly likely to suffer severe penalties.
Thanks to the Swiss National Bank intervening in the foreign currency markets to depreciate the franc as it overheats, its foreign currency holdings have multiplied to almost 700 billion Swiss francs (or $696 billion). This past year alone it paid 67 billion Swiss francs for currency market interventions and even admitted to them after the Brexit vote and resulting financial market chaos.
Further evidence shows that the SNB has been doing much the same so far in 2017. The chart above shows that Switzerland enjoyed a 17 billion Swiss franc trade surplus with America in 2016. This resulted from the value of its exports to America being twice what its imports from the U.S. were.
With the United States increasingly pursuing a “keep your friends close and your enemies closer” policy, it is harder and harder for nations such as Turkey and Switzerland to know where they stand in our increasingly geopolitically chaotic world. Remember to keep your IRA-approved metals close and your IRA-approved gold closer.