Fire, Fury, and Gold, The War of Words Continues

Although it is not a common occurrence, there are many historical instances where nations with opposing ideologies began a war of words and then went on to rattle their swords. What is unusual in this case is that it is the President of the United States rattling his sword.

"North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen.”

This was the statement spoken by President Trump yesterday in response to threats levied by North Korea, in which they vowed to launch a nuclear attack against the United States. North Korean Foreign Minister Ri Yong Ho said, “Should the U.S. pounce upon the DPRK with military force at last, the DPRK is ready to teach the U.S. a severe lesson with its strategic nuclear force.”

According to CNN, response to Presidents Trump strong warning was issued by North Korea this morning through their state-run news agency KCNA, which said North Korea's military is "examining the operational plan" to strike areas around the U.S. territory of Guam with medium-to-long-range strategic ballistic missiles.”

As such, the war on words not only continues but is now ratcheting up yet another level. However, this war of words is different in that both President Trump and Kim, North Korea’s dictator, are unpredictable. Unpredictable in words and potential actions.

The wildcard is that unlike governing in a democracy which inherently contains checks and balances, the current North Korean regime can initiate actions based on the whims of a dictator that is beholden to no one, except himself. This takes this current crisis to yet a whole new level.

All of this saber rattling has created a risk-off environment in which we have seen gold prices move dramatically higher over the last 24 hours. Gold futures are currently trading up $19 at $1281.60, a gain of over 1½%. Silver, which is also considered to be a safe haven asset, has moved up over 3% in today’s trading alone.

Considering the complexity of this current crisis and the magnitude of potential catastrophic damage, there needs to be a period of de-escalation before market sentiment will return to what it was just a few weeks ago. As such I expect the risk-off environment which has just recently reemerged to remain at the forefront of issues traders and market participants will incorporate into their trading strategy.

Wishing you as always, good trading,

Gary Wagner