Events on the Korean peninsula are not quite over as tensions rise between the two countries.
The United States has dispatched USS Ronald Reagan, a nuclear powered aircraft carrier to the region to join Sout Korea in training excercises from November 28th to December 1st. China has not taken an official stance, but made it clear that stability in the region is top priority concerning North Korea’s actions, and have been notified by America that our carrier is on it’s way. The training excercises have been planned for some time, so the dispatch of the carrier is not in direct response to North Koreas military attack on the South. So far, all parties involved, except North Korea, would like to see a diplomatic resolve. South Korea has promised retaliation of great magnitude if attacks continue.
Generally, times like this would cause a huge spike in metals, and aside from the $20 increase in gold yesterday, they seem to be holding relatively steady at the moment. This causes us to think that precious metals may have dropped yesterday were in not for the wild card coming from the Korean peninsula. There was more profit taking yesterday that seemed to be counter balanced by safe haven buying due to the incident and added concerns from the eurozone.
Metals investors need to keep this in mind if they are looking for a pullback. Again, there may have been one yesterday were it not for this event.
With the US fully behind South Korea, Japans open disapproval and China’s lack of apparent support, it is likely this event will pass without a new war started. Some have said it is another one of Kim Jong Ill’s ploys to gain desired outcomes in his favor during political negotiations.
If this passes without a major upheaval bigger than what’s already taken place, a small uptick in the US dollar and US jobs numbers coming out rather bullish, metals may take a step back. But, with a 95 billion Euro bailout of Ireland on the table, the step back may be short lived before new all time highs are attained.