He’s Back!

Just when you think the waters surrounding the Korean Peninsula are safe, Kim Jong Un’s regime once again ramps up the rhetoric by issuing new threats, this time focusing on Japan in addition to the United States.

According to Reuters, “A North Korean state agency threatened on Thursday to use nuclear weapons to “sink” Japan and reduce the United States to “ashes and darkness” for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test.”

In a statement carried by the KCNA news agency, the North Korean leader issued the sharpest threat they have ever made against the sovereign country of Japan saying, “The four islands of the archipelago should be sunken into the sea by the nuclear bomb of Juche. Japan is no longer needed to exist near us.”

If the rogue nation of North Korea has its way, the darkness and void seen from satellites at night as they pass over North Korea would extend to Japan, as well as the United States. “Let’s reduce the U.S. mainland into ashes and darkness. Let’s vent our spite with mobilization of all retaliation means which have been prepared till now.”

This is no doubt an escalation which has led to an increased level of tension in the region. Tension remains at an all-time high following this month’s underground nuclear test in North Korea, the sixth and most powerful test the North Koreans have done to date.

Gold and Safe Haven Assets Return to Favor

This most recent threat levied against the United States, Japan, and South Korea is in response to a U.S. drafted resolution which passed unanimously on September 11 by the 15-member Security Council of the United Nations.

These statements have moved the spotlight, which had been solidly illuminating equities markets both in the United States as well as globally, to safe haven assets such as gold. As of 5 o’clock EDT, gold futures are trading moderately higher at $1333.60, a net gain of $5.60 on the day, 4/10 of a percent move.

Spot gold is also trading moderately higher, currently trading at $1329 per ounce. This net gain of $6.50 on the day is a combination of both a weaker U.S. dollar as well as marginal buying. According to the Kitco Gold Index, $4.90 of today’s move is directly attributable to a weak U.S. dollar, with the remaining $1.60 gain attributable to traders and investors bidding up the precious yellow metal.

It seems as though the recent de-escalation of tension stemming from the conflict from North Korea has now begun to ramp back up. Although the recent tension once again is from a war of words rather than actions, this war of words is a direct result of the nuclear test conducted by North Korea on the third of this month. This test led to stronger sanctions being implemented by the United Nations.

These new threats issued by a rogue leader exhibit the continued determination and desire to have North Korea become a nuclear power. More importantly, these statements highlight the fact that these weapons are being designed to be used not as a deterrent but rather as a prelude to war.

Wishing you as always, good trading,