Salvation Arriveth! With a Lithp (GDX)

Salvation Arriveth! With a Lithp (GDX)

Salvation Arriveth! With a Lithp (GDX)


There’s little more to be done.  It’s now time to sit back and let the whole cursed affair unfold the way it must – with a bang and a bellow and a long draw of gin.


What we’re talking about is war – the longest war.  It began back in 1950 and there’ve been cease fires and flare-ups, but there has been no victor – and there’s certainly been no peace.


But all that’s going to change now.  Now, we’re going to bring things to a head.  That little peninsula on the far side of the ocean, where North and South Korea abut, and China and Russia and Japan share borders – or are close enough to call each other neighbors – are about to erupt like a star.

In short, in a place where close to two billion people have a vital national interest, and we have tens of thousands of troops and a vast storehouse of weaponry parked and waiting to act – the simmering is now all but complete, and the time has come to begin cooking the meat, bringing the pot to a boil, adding spices and herbs in just the right measure, and fixing the mix so the broth is both palatable and aromatic for the nation to sit and ingest.


Matt McAbby wrote last week on the potential winners and losers in a Korean conflict, and today we’re continuing with a full drawdown of Normandy intelligence.  Don’t believe for a second that tensions have abated.  The agenda is yet to be enacted.  Diplomacy is merely war by other means.


The full picture looks like this –


In the first place, what is about to begin – likely before September’s end – will launch an intercontinental battle that will reshape the global power structure in a way that no one can predict.  It will see American engagements in both the Far East and Middle East, Chinese engagements on her entire periphery, most explosively with India, potential Russian engagements on her eastern front with Europe and on her southern flank with the Muslim world, and one hell of a messy blow-up in the Middle East.

It’s all unfolding more or less according to a description supplied by former Harvard professor of international relations, Samuel Huntington, who penned a book called The Clash Of Civilizations in 1996.


The book suggested, in a nutshell, that in a post-Cold War world, international relations would be redefined in cultural and religious terms and that the majority of the world’s conflicts would occur along these civilizational fault-lines.


As the map above shows, China will be central to the global conflict dynamic, as it’s surrounded by a full five of the remaining eight civilizations.


And so it Begins…


Our sense at Normandy is that markets are going to react to any further escalation on the Korean Peninsula, and unless we get a stunning American victory with no collateral damage to South Korea, Japan, China or American interests in the Pacific, the market will waver – possibly dramatically.


But not for long.


And the reason is simple.  We’re in a bull market.  And the bull market has to run its course.


It has yet to do that.


As the final blowoff top is completed, however, there will be numerous jagged moves, each one more dramatic than the next – and each likely coincident with a new conflagration along the fault-lines delineated above.


The resultant chart of the equity market will therefore resemble a child’s zig-zag scribble, with each zag bringing the price of stocks more parabolic than the last.


Like this –

When it’s all done, there will be little left of the zags and zigs, and most likely the top of the market will come at a point when America is euphoric over its latest victory against… who knows?  Bermuda…?


Of course, it’s impossible to say exactly what sequence of worldly acts will bring us to that top, but sentiment will play a key role in determining we’ve arrived.  When American triumphalism and pride are running at championship levels, we’ll start looking for the exits.


The Time Has Come


Though the technicals don’t yet confirm it incontrovertibly, we see a strong turn in the precious metals now underway, and, if true, it likely portends a strong move higher for the commodities as a whole.


Below is the latest action in shares of the SPDR Gold Trust (NYSE:GLD), a reasonable proxy for bullion.


Have a look –

GLD emerged from its bear market lows last winter a jumped a full 30% before cooling.  The declining blue trendline indicates the pace of that decline for the next thirteen months.


But just days ago, gold cracked above that line of resistance and is now headed toward $123.50, the line against which it has met with massive selling pressure twice in the last four months (in red).


This is where the battle is currently playing out (black box), and much of what occurs next will be predicated by the North Korea story.  In short, GLD will respond favorably to every use of the term ‘fire’, ‘fury’ and ‘catastrophe’.


Now, We Are Buyers


Gold is the best place to be in the event of a military conflict larger than a border skirmish, and certainly as the conflict we’ve alluded to above broadens in scope, the need to have physical gold and silver coins on hand will grow.  Forget Bitcoin and bank certificates – and stocks, too!  Only the oldest money will be transferable.  And those who have it will possess the greatest financial dexterity should a broad global conflict ultimately ensue.


That goes trebly for real gold coins and bars, of whatever size or denomination.  It’s time to begin stocking up, one coin a month for simple folk, more for those well-endowed.  But now we start.


No excuses.

As for how to get a jump on the Joneses, we’re recommending a gold-based trade that should offer better than average profits in the medium to long term.  Play it today, and use the revenue generated therefrom to purchase the real stuff.


The miners, represented by the VanEck Vectors Gold Miners ETF (NYSE:GDX) offer much greater beta than the metal, so it’s there we turn our attention.

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With kind regards,


Hugh L. O’Haynew

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