Over the past year, I've recommended some profitable direct military and defense plays for my Energy Advantage, Energy Inner Circle, and Micro Energy Trader subscribers.
The connection between energy and global geopolitics might not seem obvious, but it is very real. It's very profitable, too, as you'll see with the choice investment pick I'm going to share in a moment.
Each time I've recommended a defense or military play, energy markets have provided the reason, whether through security reasons impacting energy sources and transport, or energy technology breakthroughs that directly benefit the defense sector.
The South China Sea, "off-the-grid" power systems, North Korea, Iran - developments in all these places and more have delivered consistent profits.
And over the past week, a ratcheting up of geopolitical tensions has compelled me to share a recommendation previously reserved for my paid subscribers with everyone...
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
The Intermediate-Range Nuclear Forces Treaty (INF) was signed by U.S. President Ronald Reagan and Soviet Premier Mikhail Gorbachev in December 1987 after lengthy, arduous negotiations.
The treaty was formally approved six months later.
The INF agreement phased out all land-based ballistic and cruise missiles, along with their launchers and on-site control systems. These weapons were defined as having ranges of 310 to 620 miles (classified as short to medium range) and 620 to 3,420 miles (intermediate range).
The treaty does not cover either sea-based weapons or those fired from aircraft. INF eliminated almost 2,700 missiles by mid-May 1991 with a 10-year period for verification thereafter.
NIGHTMARE HEADLINES: Carrier U.S.S. Ronald Reagan Burns Off Taiwan Coast; Thousands of U.S. Sailors Feared Lost... China Supreme in South China Sea; Demands Expected by 12 Noon... Click here to see the horrifying way it could happen.
Last October, U.S. President Donald Trump announced that he was withdrawing from the accord, contending that Russia had violated the treaty.
What was technically a U.S. suspension of treaty compliance took effect last Friday, on Feb. 1. Russia suspended its adherence the next day.
Weapons systems have certainly evolved over the three decades since Reagan and Gorbachev signed the accord, but the great concern emerges now that all of Europe can be targeted from Moscow.
Similarly, Russian contacts remind me that with Washington pulling out, intermediate-range missiles can easily be placed on NATO territory bordering Russia.
There is some anecdotal information coming from Europe that tends to support the U.S. position on Russian violations of INF. On the other hand, the Russian side is "unofficially" telling me the questioned weapon system does not fall within the range restrictions under the treaty.
My sources are telling me that, while the U.S. suspension move publicly calls out Russia as the reason for the action, it has more to do with American needs to offset rising Chinese weapons deployment and territorial expansion intent in the South China Sea.
The ongoing South China Sea crisis is a major concern for energy development and transit. It also comprised one of the initial reasons for my taking subscribers into the military/ defense/ security sector.
HERE'S WHERE WORLD WAR III WILL START: It's not Russia, and it's not North Korea - it's here...
The debate over who has done what and why they've done it will continue. The "he said, he said" repartee makes for some interesting - and inconclusive - political conversations, but that's not "where the money is," so to speak.
BWX Technologies Inc. (NYSE: BWXT) has been in the Energy Advantage Model Portfolio on several occasions, providing some very nice returns.
I recently had subscribers move back in. The shares are up nearly 25% since Jan. 2.
BWX is right in the center of the INF.
The company provides nuclear weapons technology, support, and fuel preparation for both the U.S. defense establishment and, of course, energy applications. Its advantaged position and superior performance made it a natural choice.
We may very well have a new arms race developing here between the United States and Russia, although the genuine need for a massive increase in short- to intermediate-range missiles may be questioned given the importance nowadays of sea- and air-launched cruise missiles and drone systems.
Nonetheless, the uncertainty and tension levels being introduced by the U.S. and Russian INF suspensions are sufficient to keep the focus on BWX and provide excellent prospects for continued superior returns.
Because of these rising tensions, the U.S. intelligence community is devoting almost all of its time and resources to two places: Russia and China.
And when you see this shocking satellite footage of what intelligence professionals are calling "China's 'doomsday' plan," you'll understand why. Whatever you want to call it, the situation is dangerous, indeed.
This video here exposes China's entire master plan to usurp American supremacy and devastate the Navy's Seventh Fleet entirely.
But America, as always, is more than ready to fight back, with a top-secret $1.743 trillion defense "ace" up its sleeve. Read on...
Follow Money Morning on Facebook, Twitter, and LinkedIn.
