North Korea Once Again Threatens Nuclear War

May 12, 2017 - 7:21pm

 by Gary Wagner

In recent weeks, gold and silver pricing moved dramatically higher due to many factors combining to paint the global geopolitical environment as uncertain. Actions in North Korea, as well as Syria, became a primary focus of world leaders as these activities provided the real potential for further escalation and increased turmoil.

In the case of North Korea, the turmoil revolved around the country’s desire to become a nuclear power. Raised tensions increased as further hostility and rhetoric from the DPRK (Democratic People’s Republic of Korea) expanded into threats to use nuclear weapons on their neighbors, as well as the United States. This rhetoric occurred as they continued to test both nuclear armament and ballistic missiles. 

In response, the United States sent an armada, led by the aircraft carrier Carl Vincent, into the Korean Peninsula waters. This global tension was a contributing factor to gold prices moving substantially higher, trading just shy of $1300 in the middle of April.

Tensions in Syria began to wane as Russia proposed a cease-fire in Syria. At the same time, it seemed tensions in the Korean Peninsula were also starting to subside. This resulted in a sharp rise in the U.S. dollar as well as a substantial correction in both gold and silver pricing. 

This week, gold prices fell to a low of $1215 per ounce, giving up approximately $80 in value as the factored premium from global tension was removed from pricing.  However, the brief pause in geopolitical tension might be coming to an end as North Korea prepares for a sixth nuclear test. On Wednesday of this week, the North Korean ambassador to the United Kingdom conveyed that their government is willing to pursue another weapons test at an undisclosed time, despite military threats from the US. 

According to Newsweek, recent satellite imagery has indicated new activity at North Korea's Punggye-ri nuclear test site, a development that U.N. International Atomic Energy chief Yukiya Amano said Thursday gave the agency "concrete information that the nuclear program is going ahead."

As reported by Newsweek today, North Korea is once again threatening to prepare for a nuclear attack until the U.S. abandons its “hostile policy.”

“North Korea is blaming the U.S. for instigating what have become heightened tensions on the Korean Peninsula, as Pyongyang vows to go forward with nuclear weapons testing and Washington threatens to use military action to prevent it from doing so.”

This week, rising prices in both gold and silver reflected a weaker U.S. dollar, rather than the potential escalation of tensions in North Korea. However, it is distinctly possible that a substantial premium will be factored into future gold pricing if the tension in North Korea once again begins to escalate.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
Yesterday morning we sent out a TRADE ALERT:  We are issuing an aggressive BUY Signal in Gold
Buy Gold at the market (1225 June 2017 futures Contract)  Stop needs to be below 1210
Buy Silver at the market (16.32 July 2017 Contract)    Stop below 16.06
Maintain Long positions and Stops
Gold Market Forecast

We have been talking about the necessary parameters to trigger our next trade recommendation over the last couple of weeks. First and foremost we were looking at a logical Fibonacci retracement area that would be appropriate to find a level of support.

Second we were looking for a Japanese candlestick pattern at those Fibonacci levels that would indicate a potential key reversal. Yesterday morning we issued a trade recommendation based on both parameters.

In the case of gold we identified an Engulfing bullish pattern, and in the case of silver we identified a bullish Harami confirmation pattern.