– Trump & Russia threaten each other as conflict over Syria escalates – U.S. Navy destroyer armed with tomahawks arrives off Syria, “harassed” by Russian warplanes – Heightened risk of war between Syria, Russia, Israel, UK & the U.S. – Russia & Iran will pay “big price” for gas attack – Trump – Trump will decide on response to Syria attacks “very soon” – Trade and economic war between Russia and U.S. deepening – Russia warns of “grave” response if U.S. launches strike
The conflict between the U.S., the UK and Israel and Syria and its allies Iran and Russia looks set to escalate in the coming hours and days.
U.S. missile destroyer USS Donald Cook has quickly sailed to just off Syrian territorial waters and is reportedly being “harassed” by low-flying Russian warplanes. CNN Turkey reports that they have buzzed the “Arleigh Burke” class warship at least four times.
In an ongoing war of words, the U.S. is today expected to call for a U.N. Security Council vote on Tuesday on a proposal for a new inquiry into the responsibility for use of chemical weapons in Syria after reports of the poison gas attack on a rebel-held town in Eastern Ghouta.
The poison gas attack has been pinned on President Bashar al-Assad’s forces by the President Trump, PM May and some other western governments.
Yesterday’s attack on the T4 airbase near Homs was initially blamed on “an American aggression” by the Syrian state news agency, however Moscow quickly asserted that the Israeli airforce was responsible.
The mention of Israel by Russia was an unusual move given they haven’t bothered to do so in previous attacks. Israel has been known to attack Iran-supported areas in Syria. By naming Israel Russia was likely making power play. Had they allowed the US to be blamed they would have been expected to retaliate with some force.
It is important to note that the chemical attack may or may not have happened and we may be caught in a web of tactical power-play.
Reuters said it could not independently verify the reports. Others did the same: The Syrian Observatory said it could not confirm whether chemical weapons had been used in the attack on Saturday.
The ‘Big Price’ is unknown
Trump tweeted that Syria and its allies will pay a ‘big price’ for its attacks on civilians. Whilst that price is yet to be known, no-one is in any doubt that some actions will be taken.
US Defense Secretary Jim Mattis yesterday warned “I don’t rule out anything right now.” Trump has told reporters that a response is imminent. We also know that recently appointed Bolton is extremely hawkish and has even been labelled a war monger.
This is now not just about a war between Syrians. Global super and nuclear powers are now involved – Russia, Iran and Israel, the U.S. and indeed the UK.
British Foreign Secretary Boris Johnson hinted at possible military action in Syria following a chat with his French counterpart. Johnson said there should be “no impunity for those that use such barbaric weapons.”
But it isn’t just a war of words anymore as seen in the US Navy’s guided missile destroyer (with 60 Tomahawk cruise missiles on board) has dropped anchor just off Syrian territorial waters.
U.S. military planners have drawn up more than one option for possible military action against Syria, including a strike similar to last year’s attack in which 59 sea-launched cruise missiles inflicted heavy damage on a Syrian Air Force airfield in Homs.
Pentagon officials, speaking on condition of anonymity, said the options now are similar to those presented to President Trump after last year’s chemical attack in northern Syria that killed and injured hundreds of civilians, including women and children.
But officials said the president could decide to choose a more robust option this time, given that Syrian President Bashar Assad didn’t seem to get the message last time.
Syrian ally Russia is well aware that the US may take stronger actions this time around, and they’re getting ready for it:
Circular finger pointing does not point to zero responsibility
Some investors are aware that there are alas few innocent parties in this conflict – besides the innocent civilians caught in the ‘Great Game’ machinations. Whilst Assad and Putin are always blamed for chemical attacks, many believe hawkish elements in the West are using misdirection in order to divert attention from its own destructive role in Syria and the entire Middle East, to demonise their opponents and create ‘a massive perceived external threat.’
It is somewhat reassuring that, ‘No one in the Trump administration—not President Trump, not Defense Secretary James Mattis, neither freshly installed National-Security Adviser John Bolton nor Secretary of State-designate Mike Pompeo—has expressed interest in removing the Assad regime by force and rebuilding the Syrian nation, the way the U.S. overthrew Saddam Hussein in Iraq. But some have advocated pushing back hard against Assad and particularly his Iranian allies in Syria’ as reported inThe Atlantic.
But it is also worth remembering the politics of fresh-off-the-boat National Security Advisor John Bolton who in 2015 said that the United States carve out an independent Sunni Muslim state in northeastern Syria and western Iraq.
If “defeating the Islamic State means restoring to power Mr. Assad in Syria and Iran’s puppets in Iraq,” pleasing Russia and Iran at the expense of the United States, Israel, and America’s Arab partners, “that outcome is neither feasible nor desirable.”
Trade sanctions are not just in the background but an early shot fired
Trade sanctions and tariffs may well be named as Movement of the Year by Time magazine should the year continue as it has been. For President Trump such moves are two-fold, firstly to demonstrate how to ‘Make America Great Again’ (see trade tariffs on China) and how it can still control other global powers (see sanctions on Russia).
The problem is countries in the firing line have very large arsenals of their own and may not be afraid to use them if they feel they are being attacked and backed into a corner.
New trade sanctions released on an almost regular basis combined with finger pointing over Syria, has meant a ramping up of geopolitical tensions and an increase in attention to and an uptick in gold.
Investors should remain alert to the fact that there are several leaders involved who will not be seen to give in to any kind of threat, whether military or trade based.
Gold tends to outperform other assets when there is uncertainty and conflict – especially risk assets such as stocks and bonds.
Gold performs well because it is proven safe haven asset that has a track record of retaining value throughout history or rising sharply in value during conflict and war.
We are very lucky that we do not live in a conflict zone such as Syria. However, we are vulnerable to terrorism and acts of war, particularly cyber attacks which we know are likely to be used with dramatic effect in future conflicts.
Investors should not be arrogant enough to believe conflicts in Syria and beyond do not affect them. They do and so portfolio protection with allocated and segregated gold bullion coins and bars is an important financial step.
As we concluded last week on the anniversary of Martin Luther King’s death:
There are many side-effects of wartime, one of the most long-lasting is the financial impact on individuals’ savings. Nowadays ‘war’ does not just means guns and tanks, it can be trade wars or currency wars. Sadly, they’re not exclusive of one another.
Trade wars frequently turn to currency wars. These decimate the capital of companies and the wealth of people and nations. It can also result in stocks and shares losing value sharply and crashing. Governments in any kind of war can be ‘forced’ to devalue people’s savings and in the next crisis, bail-ins will likely see savers’ accounts plundered … all for the public good.
This is where gold bullion comes into its own. Throughout history it has acted as a safe haven during times of protectionism and economic war.
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