This past week saw the tense situation with North Korea heat to a boiling point once again. The rogue nation test fired a new and more powerful kind of its intercontinental ballistic missiles which they claimed could reach any part of the United States. This development has provoked international condemnation, especially from neighboring U.S. allies South Korea and Japan. Even the North Korean’s staunchest ally the Chinese were troubled by it.
This ratcheting tension in the Korean Peninsula is an ideal reminder of why you should own gold in times of financial crisis. It will help protect your retirement accounts because gold is the best time-tested vehicle for protecting assets in times of geopolitical chaos. This is why gold offers insurance and protection during market turbulence.
U.S. Reacts to the Latest North Korean Missile Launch
This latest missile launch was monitored by the Japanese as it splashed down in their territorial waters the Sea of Japan and the Japanese exclusive economic zone. They observed the ballistic missile attaining a new North Korean high of over 2,500 miles (greater than 4,000 kilometers) before it descended back to earth.
It represented the first such test that the outlaw state had carried out since its September 15th test of the intermediate Hwasong-12 missile. Colonel Robert Manning off the Pentagon released the U.S. statement on the launch:
“The U.S. Department of Defense detected and tracked a single north Korea missile launch today at about 1:17 p.m. EDT. Initial assessment indicates that this missile was an intercontinental ballistic missile. We are working with our interagency partners on a more detailed assessment of the launch. The North American Aerospace Defense Command (NORAD) determined the missile launch from North Korea did not pose a threat to North America, our territories, or our allies.”
What makes the launch all the more concerning is that experts fear that Pyongyang has reached the late stages in its quest to create nuclear warheads which could be mounted atop the ballistic missiles then fired at American allies or the United States itself. Russia has previously warned about such an apocalyptic scenario occurring on the Korean Peninsula. US. Defense Secretary James Mattis argued:
“It went higher frankly than any previous shot they’ve taken. It’s a research and development effort on their part to continue building ballistic missiles that could threaten everywhere in the world basically… The bottom line is its a continued effort to build a ballistic missile threat that endangers world peace, regional peace, and certainly the United States.”
Experts agreed that the latest ICBM test North Korean Dictator Kim John Un ordered could reach as far as the East Coast of the United States’ mainland. This Hwasong-15 has a greater range and power than any they have test fired in the past.
Even North Korea’s Ally China Is Worried About the Missile Launch
One interesting twist in the latest escalation of the crisis is that even long-time North Korean ally China reacted strongly and negatively to the test. Their foreign ministry voiced its “grave concern and opposition” to the event in what is a atypical criticism of its regional ally and southern neighbor. Geng Shuang the ministry spokesman opined that China hoped “all parties would act cautiously to preserve peace and stability.”
Experts on the region did not see the Chinese militarily or even economically pressuring North Korea to stop their program though. This graph below demonstrates how critical China’s trade with the rogue nation is:
IHS Markit’s Deputy Head of Asia-Pacific country risk Alison Evans stated:
“China will probably continue to press for diplomatic talks, arguing for the suspension of North Korean nuclear device and missile tests in exchange for the suspension of U.S- South Korean military exercises. Although it has acted swiftly on the latest UN sanctions, China is unlikely to go so far as to fully implement new sanctions that, in its judgment, would risk substantially undermining the economic well-being or social stability not just of North Korea, but also of the Chinese population near the North Korean border, which relies heavily on such trade.”
It means that the effective help from China in diffusing the situation with North Korea will be limited.
Japanese Debating Longer Range Missiles for Better Strike Capability
The Japanese have been debating how they should respond to Pyongyang’s provocations as well. Experts have said the Japanese military and government wants to acquire missiles with a better range for striking North Korean missile launch sites. One of these is the 500 km striking distance Joint Strike Missile that Norwegian Kongsberg Defense & Aerospace designed. The Japanese F-35 stealth fighters would equip them, according to Fuji Television.
Itsunori Onodera the current Japanese Defense Minister also formerly headed up a faction of lawmakers in the ruling Liberal Democratic Party that was pushing for Japan to obtain offensive striking capabilities in an effort to discourage North Korea from firing any missiles at Japan.
More Tests Likely To Come With South Korean Winter Olympics
Analysts anticipate that there will be more missile tests fired off around the upcoming 2018 Winter Olympics being hosted in PyeongChang in South Korea. These begin in the first part of February. Despite the fact that the South Korean leader Moon Jae-in invited north Korea to take part in the sporting competition, the peace initiative is unlikely to gain any results. It is more likely that Kim Jong Un will perform missile or nuclear tests during or even before the games get underway.
Director of Defense Studies Harry Kazianis of former President Nixon’s Center for the National Interest expects a great number of tests over the first quarter of 2018. He claims that the North has developed:
“A lot of goodies that they will start rolling out. This situation is going to get worse. The testing is going to get more rigorous. We’re really at just the tip of the iceberg of seeing their capabilities, to be honest.”
Among the technology Kazianis believes they will soon be testing are heat shields for missile reentry.
How the Chinese Might Respond to An Outbreak of Conflict in the Korean Peninsula
All of this begs the question what would the Chinese do if a conflict did break out on the Peninsula. While the government officials are tight-lipped on the subject, you can know what their general policies are based on articles in China’s state-run newspaper. An August editorial of the Global Times argued that:
“If North Korea launches missiles that threaten U.S. soil first and the U.S. retaliates, China will stay neutral.”
Yet this same spokes-paper for China argued that should the United States and South Korea attempt “to overthrow the North Korean regime… China will prevent them from doing so.”
Ultimately American and Chinese Trade and Relations Are At Stake
The North Korean situation could heavily influence the future of U.S. and Chinese relations and trade. This is a dimension of the Asian flash point that you do not hear much about in the news. The importance of trade and stability between the world’s first and second largest economic powers can not be overstated.
Geopolitical instability like this in the world is why you need to have gold as a safe haven hedge in your retirement portfolio. Markets are only one crisis away from a significant correction. Gold helps to smooth out the volatility of stocks at times like these. Now that you know why you need a gold IRA, it’s a good idea to consider how to invest in gold. If you have an existing IRA, then you might review the Gold IRA rollover rules and regulations.