Gold surges as N. Korea fires ballistic missile over Japan

Safe haven buying sees gold break outto 10-month high after Jackson Hole and rising North Korea risk of attack on Guam

South Korea’s air force dropped eight MK 84 bombs near Seoul; simulating the destruction of North Korea’s leadership

Gold rises from $1,291 to $1,325; Silver surges 3.2% from $17.05 to $17.60

Volatility as seen in VIX surgesas stocks fall; FTSE -1.1%

Yen rises in short term but no safe haven in long term with gold haven risen 9.8% per annum in JPY (see chart)

Gold was moving higher after Jackson Hole and had broken through crucial $1,300/oz level

Asian geopolitical riskallied to U.S. political instability increasing safe haven bid

$20 trillion U.S. debt ceiling storm looms

Editor: Mark O’Byrne

This morning the price of gold has rallied to its highest point since the Trump’selection. North Korea’s firing of a missile over Northern Japan which landed in waters off Hokkaido in the Pacific, has sharply escalated tensions in the Korean peninsula and in Asia.

This latest move by Kim Jong Un wasintended to show that an attack on Guam is possible at any time, according to North Korea’s Mun-hwan.

Source: Yonhap via ZeroHedge

There had previously been concern that the war of words between Trump and Kim Jon-Un would result in others getting caught in the crossfire. This was confirmed this morning when Japan was made a clear target.

North Korea’s reckless action is an unprecedented, serious and a grave threat to our nation

Japanese Prime Minister Shinzo Abe

Immediately after the missile launch was detected the Japanese government’s J-Alert system interruptedradio and TV to warncitizens of the possible missile and urged them to take refuge in solid buildings or underground shelters. Bullet train services were temporarily halted and warnings went out over loudspeakers in towns in Hokkaido.

South Korea’s air force has staged a live-fire drill simulating the destruction of North Korea’s leadership. Earlier this morning four South Korean fighter jets bombed a military firing range north of Seoul after President Moon Jae-in asked the military to demonstrate capabilities in a show of strength to North Korea.

North Korea refers to these missile launches as ‘tests’. But they are more than tests of the equipment, they are also tests on the patience, nerves and self-control of those who feel threatened by Kim Jong-Un. Observers and surrounding countries believe thissaber-rattling is growing ever more serious and dangerous by the day.

As Yonhap notes,the North’s provocation is another slap in the face to Moon and U.S. President Donald Trump as they have sought to resume dialogue, and could bring tensions on the peninsula to a new high.

Trump is also left red in the face after his comments that Kim Jong Unis starting to respect us.Yet another idiotic comment from the current incumbent of the White House.

Safe havensrise as risk assets fall from record highs

Fear in the markets hasbeen expressed by the climb in price of gold and the ongoing support for the Japanese Yen, Swiss Franc and US Dollar.

While the yen has risen in the short term, the notion that it is a ‘safe haven‘in the real sense of that term as a medium and long term hedge for investors is inaccurate. This is clearly seen in the table above and the chart below which show that the yen has fallen nearly 10% per year versus gold in the last 15 years.

Gold rose in yen prior to the crisis from 2002 to 2007 and again during the height of the crisis from 2009 to 2012.

Seeing as Japan is at risk of a nuclear attack and being sucked into a war wars are expensive things the yen is actually vulnerable and will likely fall in the coming months.