Start the conversation
Technically speaking, Kim Jong Un never left; he just started launching missiles.
Missiles capable of carrying miniaturized nuclear warheads, according to various sources.
Obviously, that's a BIG problem.
So far the markets have taken this in stride, but traders finally let jitters get the best of them last week.
That's why "safe assets" like gold and the Swiss franc rallied against the U.S. dollar as a result, while the S&P 500, the Dow, and the Nasdaq all fell.
As you might imagine, I'm getting lots of questions about what the brash young leader's nuclear aspirations could mean for your money.
And, of course, how to play the situation for safety and profits.
Let's Get Started… There's Not a Minute to Waste
Unfortunately, despite the fact that we've been talking about North Korea for over a year, most investors are still totally unprepared for the unthinkable.
That means they're going to get caught flat-footed if the shooting starts, and that's a position I don't ever want to see you in.
Given what we know, there's simply no reason you can't start preparing as the headlines play out. The case was the same back in April, when I last wrote to you about North Korea, and it's certainly no different now.
1. A Surgical Strike Isn't Feasible
Many people are trying to armchair quarterback the situation by suggesting some sort of surgical strike is in order – meaning the military will hit very specific targets, very quickly and completely.
The problem is that North Korea has anticipated this and, having done so, has spread its weapons systems out nationwide. They've used a carefully concealed network of tunnels and the country's naturally mountainous terrain, both of which make them harder to hit and even harder to destroy.
North Korea has the fourth-largest military population in the world, with an estimated 1.19 million men and women under arms and more than 8,600 artillery units.
Should even a single target survive, there are more than 10 million people in Seoul, nearly 40 million in Tokyo, and another 1.3 billion in nearby China at risk of chemical, explosive, and even biological weapons that can be launched more quickly and stealthily than nuclear missiles should Kim's nuclear commander, Gen. Kim Rak Gyom, give the go-ahead.
Many "limited engagement" proponents fail to understand that Kim Jong Un will push the button if he feels he has nothing to lose, or even if he simply feels the need to "save face" rather than risk the respect (and fear) of his subjects.
There are direct parallels, for example, to Saddam Hussein, Muammar Gaddafi, and current Syrian strongman Bashar al-Assad.
2. Regime Change Would Work Against Peace
Some folks favor "regime change" – a fancy, sanitary term used to avoid the unpleasant connotations associated with changing a country's power structure using military force or covert action, or both.
In this case, not only would Kim have to go, but everybody on a long "kill list" would have to be eliminated, too. Put bluntly, there's no way the United States would "get 'em all."
In the meantime, China would see its borders overrun with refugees, and millions of troops in that nation, Russia, and of course in South Korea, would face imminent confrontation.
As unpalatable as the thought is, there's a good case to be made for the "devil you know" as opposed to the "devil you don't."
3. All-Out War Is a Losing Proposition
And, thanks to long periods of time he spent outside North Korea growing up, Kim knows it. He also understands that the rest of the world is war-weary after 27 years of conflict in the Middle East and the ongoing fight against terrorism… and that everybody else would lose more than they would gain if the battle of boastful leaders turned to a battle with bullets.
Tactically speaking, even if it were possible to use such overwhelming force, as was the case in Desert One or on D-Day, for example, the other consideration is that Kim's army would roll into South Korea with such speed and ferocity that they'd repeat the "Banzai charges" of Japanese soldiers in World War II – although a far deadlier version thanks to modern weaponry.
4. Global Markets Will Tank When the Shooting Starts – Even If Not a Single Shot Is Fired
Contrary to what the mainstream media and our leaders seem to be focused on, Kim doesn't need missiles. He can ship a dirty bomb using the postal service or merely put a suitcase nuke on a freighter and sail it into Yokohama – or Hong Kong, where it would be welcomed as normal shipping traffic.
Or he can use a half dozen other low-tech methods to ensure that his bombs get where they're going and that they detonate on schedule.
That's what our intelligence services really have to guard against, even as our leaders continue to operate on the assumption that they'll be fighting a traditional conflict.
5. Kim Does Not Respond to Traditional Diplomacy
There are two ways to deal with Kim – the carrot and the stick.
The former is a reward, while the latter is a series of punishments using "sanctions." He doesn't like the former because it makes black market activities considerably more difficult, and he loves the latter because they're worth the paper they're printed on… and that's about it.
Kim is a wild card, which means that having imaginary conversations with him are going to mean nothing at the negotiating table, especially to traditional diplomats who depend on some small degree of logical behavior and incentive recognition.
It's beginning to dawn on the world that Kim has no incentive for restraint.
So now what?
The markets haven't pitched a fit yet because traders are still trusting that there will be a solution, a comment I made earlier this week on "Cavuto: Coast to Coast."
Instead, what I think we have is seasonal profit taking that falls within historically normal patterns for this time of year.
I expect that to change very quickly in the weeks ahead if diplomats cannot figure out a way to push everyone back a few paces. President Trump doesn't seem to be helping matters much in this regard, observing Thursday that perhaps "fire and fury" wasn't tough enough.
Former NATO Supreme Allied Commander, retired Gen. Wesley Clark, sagely observed to CNBC that "rolling back the clock" is unrealistic and unachievable. What we should seek is "strategic stability and continued deterrence."
And that's your entry point…
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.