With global tensions running high, we think it is important to remember the role geopolitical standoffs and the outbreak of hostilities play in driving gold prices higher.
When we say we’re keeping a sharp eye on the market, it includes tracking important developments on the international front. One of the best examples of that kind is the role the 1979 Iranian revolution played in fueling one of history’s most powerful gold and silver bull markets.
Let me pepper you with a few such things that are on our radar screen today:
- Old alliances shifting. The Pentagon reported that US forces “came under artillery fire from Turkish positions” on October 11. The gravity of this event cannot be overstated. The US air base at Incirlik, Turkey is universally believed to host some 50 US nuclear weapons. Since tensions are high enough that US military spouses and children have been relocated from the base, it is clearly not a good idea to leave dozens of B-61 hydrogen bombs in Turkey.
- The unrest and street rebellion in Hong Kong. Incursions by the People’s Armed Police from Shenzen into Hong Kong and the fate Hong Kong dollar are things to watch for. In any case, the Hong Kong protests have been going on for months now, just as disturbances went on in the streets of Iran persisted for months before the Shah was driven out and the rule of the Ayatollahs was established.
- Vital waterways crowded with warships. The Ronald Reagan Carrier Strike Group, maneuvering in the South China Sea, has been tailed by Chinese warships. This is nothing new, but territorial claims in the South China Sea are being asserted ever more vigorously and the crowed waterways can quickly lead to an accident or incident.
- The renewed US military buildup Saudi Arabia. 11,000 troops were sent to Saudi Arabia, a purported ally, in May. Now another 3,000 have been added, along with two new fighter jet squadrons. The most recent addition to US forces there also includes two Patriot anti-missile batteries and one high altitude area defense system. US forces in Saudi Arabia have long been a powder-keg issue in the Islamic world.
These are all fuses that can ignite an explosion in gold prices. Dangerous geopolitics drive gold prices higher. Don’t wait for an international incident to invest in gold. Protect your wealth before it happens. A month too early is better than a day too late.