Dear Readers,
We hope you’ve had a good break from routine over August and managed to spend some precious time with family and friends.
August has seen the price of Gold rise by a massive 6.6% or £64.10 per ounce, while the price increase in Silver outpaced Gold at a whopping 10.73%. As Bleyer have long since warned the price of Gold and Silver rise in times of uncertainty.
Global Floods:
This month has seen the somber event of unprecedented flooding in Texas, USA. The measurements of rainfall involved are difficult to fathom. In addition, Hurricane Irma (and then Jose) is approaching quickly behind Hurricane Harvey, predicted to cause catastrophic damage. Their exact track is as yet unclear but will hit the Caribbean and then either Florida, the Gulf of Mexico or the Eastern US seaboard states.
But as CNN noted, “It’s not just Harvey, August marked a month of deadly floods around the world.”
- Parts of South Asia were pounded by historic rainfall during the height of monsoon season. More than 1,200 people have been killed in India and Bangladesh and some 41 million have been affected by flooding.
- Mumbai, India’s financial capital, has been beset with unrelenting rain, that has turned its streets into rivers
- Sierra Leone saw flash flooding which claimed 500 lives
- Nigeria saw 100,000 people displaced through floods in August
- A third of Bangladesh is under water with floods so far claiming the lives of 142 people and impacted more than 8.5 million
- At least 143 people have been killed since August 11 in Nepal. Nearly 80,000 houses have been damaged by a type of storm that has not been seen in about 60 years, contributing to the high death toll and heavy destruction (CNN)
Physical Gold Markets Affected:
Many of the Eastern nations affected are high producers and buyers of not just gold but specifically Physical Gold. India – for example – is one of the world’s largest gold markets.
But, even such unusual global flooding does not account for the entirety of the staggering and rapid rise in the price of Gold and Silver this last month.
North Korea: How it starts?
We would tragically have to live on a different planet to not be aware of the rising tension between a now-nuclear North Korea and the International Western Community, most notably with South Korea, Japan and the US. North Korea recently flew a missile over Japan and threatened to fly another missile toward the US Pacific naval base of Guam, hence the US’s involvement both as an ally of Japan and in defence of its own international territory.
But, these Monthly Updates try to look below the immediate headlines at what is really going on behind the surface.
What is Guam and why history teaches us so much:
Much like the recent floods in the US, North Korea is a bi-partisan issue and bizarrely, also connected to flooding, but this time man-made. Did you know that the US military island base of Guam was created by John F Kennedy, a Democrat. Just two days before he was assassinated he signed a bill to order the submergence of the tidal lands of Guam, the Virgin Islands, and American Samoa, for American commercial and military use; precisely because of the long term tensions of the Cold War (The John F Kennedy Presidential Library Archives).
Sanctions are now being upgraded against North Korea. History is repeating itself, just with a different country.
Two decades previous to JFK, “on July 26, 1941, Roosevelt (another Democrat, not a Republican such as Trump) “froze Japanese assets in the United States, thus bringing commercial relations between the nations to an effective end. One week later Roosevelt embargoed the export of such grades of oil as still were in commercial flow to Japan.” The British and the Dutch followed suit, embargoing exports to Japan from their [international bases] in southeast Asia.” (Independent Institute)
This all sounds so familiar, doesn’t it? Except, this wasn’t after Pearl Harbour, this was five months before. Economic warfare always starts before military warfare.
So, this month the Republican US President may have “pressed China to exert more economic and diplomatic pressure on North Korea to help rein in its nuclear and missile programs” but this move is taken straight from the history books of the Democrats playbook. Did you know that North Korea sells 85% of its oil to China? Now, I’m not saying Kim Jong Un is a balanced man. But this may be precisely why Putin declared yesterday that “harsher sanctions on North Korea were futile” because history proved they were also not only futile against Japan but, some argue, cornered Japan into then striking militarily.
Pearl Harbour then brought the US into WWII militarily, when it was already involved economically. Much the same today, Trump cannot strike North Korea first. The International Community would condemn and isolate the US with such a choice. Personally, I wonder if Kim Jong Un will strike Japan, knowing full well that Western nations will then have to defend an ally. These are terribly sober thoughts to mull.
China: Which side are they on?
And yet, even with an 85% stake in North Korea’s oil revenue, China “has repeatedly said its influence on North Korea is limited and that it is doing all it can. “They did a little, not a lot,” a (US) official said. “And if he’s (Trump) not going to get what he needs on that, he needs to move ahead on his broader agenda on trade and on North Korea.”
History shows us this is a Republican president taking his moves straight out of two previous Democrat President’s playbooks. Tragically, a flood brought the US together across party lines and sadly, so does war.
North Korea, China, Russia and Iran:
The trouble is North Korea is therefore linked to China, China to Russia and Russia to Iran. And they’re all connected via oil and gold. I first wrote about the connection between Russia, Gold and Oil back in December 2014. It was obviously a long way off. Some would say the Cold War never really ended, it just went into hibernation.
The US and Russia are already at war over Syria:
Syrian President Assad said that his coalition with Russia, Iran (and Iraq) must succeed in Syria’s war. But that is not the only alliance Russia has been building. We have covered this in detail but Russia is extremely close to China, as both move against the dollar.
Why is this significant to Gold?
An international Gold backed currency is the most logical safe haven when fiat currencies collapse. Russia and China seem to be positioning themselves as the owners of most of the world’s physical Gold, in order to be the creators of that new Gold backed currency.
We at Bleyer are under no illusion that a currency war has been in action for many years: “If you had the means to acquire hundreds, or even thousands, of tons of gold, you’d want to do so as stealthily as possible in order to avoid tipping off the market. If your strategic objective was to dramatically boost gold reserves over a period of several years, you wouldn’t want to see the price rise – at least not while you’re still accumulating.
In an effort toprop up the stock market, (the Chinese Government) tried to forbid people from selling shares of stocks in recent years. How heavily involved China is in managing the gold market is impossible for an outsider to know. But there is plenty of evidence to suggest that China is covertly buying gold while dumping U.S. Treasuries.” (Tyler Durden)
Guess what? I wrote those last two paragraphs in October 2015.
We like to give our clients plenty of forewarning. The axis of North Korea, China, Russia and Iran is an extremely concerning one.
Gold and Silver Price Rises in Times of Uncertainty:
Gold is an historical safe haven, as very real concerns of economic and military warfare increase. In addition, storing some of one’s wealth in physical coins and bars is a portable and internationally recognised form of wealth preservation in times of difficulty.
The monthly updates are an attempt to block out the noise and explore below the headlines. One might be tempted to just think North Korea is a small country the other side of the globe. But, as can be seen, the nations to which it is connected make this latest cycle of brinkmanship really quite concerning on an international scale. Expect both the price of oil (petrol) and Gold and Silver to rise if tensions continue.
Call Bleyer on 01769 618618 to talk through your Gold and Silver purchases now. If military action is taken, or if North Korea either intentionally or accidentally hit an international target, the price of Gold and Silver will sky rocket overnight. We encourage our readers not to be caught out but to call a member of the Bleyer team now to chat through their investment choices.
