Thoughts about Geopolitical Uncertainty

gold bar, gold photo
Written by Mike Hammer

With tongue firmly in cheek, your friendly neighborhood Gold Enthusiast offers the following observations.

It’s been a busy couple of weeks on the international scene. First (by your Gold Enthusiast’s remembering) was news from Europe that Greece wouldn’t meet it’s latest interest payment. Despite those being renegotiated down at least twice in the last 5 years. That drew hardly a stifled yawn; after all, you’d have to have been born since 2015 for Greece missing a payment be any sort of news. And any analyst who said that was an unexpected event probably got their pay grade reduced by 5 or 27 steps.

Then came more news out of the EU. This time several of Italy’s banks were found to be in dangerous straights. More specifically, some balance sheets were apparently sinking, under more than global glacier melt. Sigh (you could almost hear Mario Draghi sigh from here in New York), and just after he’d somehow temporarily convinced the world that a group of countries, only two of which can actually pay their own bills, could be worth investing in again.

That came along with similar news from some Spanish banks, one of which has been teetering on “having major issues” for, oh, well, since something big happened in international finance in 2007. “Having major issues” is a household code phrase for The Gold Enthusiast’s family unit to don their yellow rubber duckie swimmie vests and get ready to watch the ship sink out of sight.

Then, because Donald Trump didn’t get caught saying anything stupid one day, North Korea decided they weren’t getting enough attention, and threw a typical teenager hissie fit (another code term) and told everyone they were going to punch them with a nuke if they didn’t get more attention RIGHT FRIGGIN’ NOW. The Chinese reacted with typical aplomb, having been in the parenting role toward North Korea for some time now. They moved some troops around so the Korean Fearful Leader would know We Really Mean Business This Time.

Then the US got in the act. The Donald turned his attention away from Twitter long enough to inform the planet that he wasn’t going to take any BS from North Korea, and “something big would be done” if North Korea actually did any big nasty thing. Something big must be done is not a code term around here, but apparently is in tall New York penthouse buildings.

Then yesterday Vijay Mallya, a big-spending Indian airline starter kinda like Richard Branson, was finally picked up after at least 7 months of paperwork shuffling in London. Apparently he owes 900 million pounds, euros, or some currency of importance, to someone not rich enough to ignore that kind of oversight. Vijay is possibly more well known as the founder of the Force India Formula 1 car race team, whose parties brought back the idea of fun to a sport that had forgotten about fun since Eddie Jordan’s team was sold. It should be noted that the Red Bull team really tried to be fun, but they got all serious when they started actually winning world championships, as tends to happen.

Arresting rich famous sporting people is about as close as The Establishment goes toward admitting Something Is Seriously Wrong. After all, the US banking system almost collapsed after years of horrid mismanagement and probable gov’t official payoffs, and the only person who went to jail for that was a reporter who stood outside a door too long.

Nonetheless, our favorite yellow metal has somehow crept up in price over the last 3 weeks. Kinda like a yellow canary in a coal mine. Remember the saying Ignore What They Say – Watch What They Do? Well, it is as pertinent today as ever.

We don’t know for sure that gold will keep rising. Our advice stands: Buy “some but not a truckload” whenever gold breaks up through a resistance level. Then wait ’til people realize all is not how those trying to be in control say it is.

Signed, The Gold Enthusiast

NOTE: No specific securities were mentioned in this article. For full disclosure: At the time of writing, the author was long NUGT. The author may trade NUGT, DGP and/or JNUG in the next 48 hours.

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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