Justin’s note: North Korea is “not far away” from launching an intercontinental ballistic missile (ICBM).
That’s the word coming out of Pyongyang, North Korea’s capital. Bloomberg, The Wall Street Journal, and Reuters have all reported on it.
It’s a scary prospect, for sure. After all, North Korea’s leader, Kim Jong-un, seems hell-bent on destroying the United States.
At this point, one can’t help but wonder if we could actually have a full-blown nuclear war on our hands. To make sense of this issue, I called up Casey Research founder Doug Casey.
The following is a transcript of that conversation. We hope you enjoy it.
Justin: Doug, could North Korea really launch an ICBM soon?
Doug: There’s no question that even a dismally poor country like North Korea could do it.
Remember that ballistic missiles were first used in the 1940s by the Germans. A lot of things have happened in the last 70 years. The technology is widely disseminated, and the components are vastly improved. It’s no longer “rocket science,” as it were, to develop a missile.
But I don't know why people are paying so much attention to the development of a North Korean missile, because they’re only important if you can put a nuclear weapon on them. Which they’ll also be able to do. But who cares? At this point, ICBMs as a delivery system are old technology. You’d be stupid to use them.
If the North Koreans launched a nuclear missile attack, its source would be easily detected. It would be like signing their own death warrant. Nuclear weapons are a good counter-punch threat, to fend off an invasion—if Saddam had them the US wouldn’t have dared to invade Iraq. But they make no sense as an aggressive weapon.
Justin: That’s good to hear. But couldn’t they launch a nuclear attack on the US using other means?
Doug: If they want to destroy a foreign city, be it Tokyo, Seoul or Los Angeles, the way to do it is to deliver the device by commercial ship, in a container. It could be set off in a number of ways, by GPS, by timer, or radio signal, among other obvious means. It could be delivered by a commercial airplane, which would get landing clearance, like any other plane.
And frankly, if they can miniaturize the things enough, have them delivered by FedEx; they’ll arrive exactly where they’re supposed to, cheaply, and on time. Which is more than an ICBM can promise.
As usual, the press is looking in all the wrong directions. And North Korea, developing ICBMs, is wasting its meager resources. If they really want to destroy cities—which is itself stupid and counterproductive, even as a counterpunch—they’re looking at the previous technology. The way generals always do. It’s like cavalry before World War I and battleships before World War II. ICBMs are in an exactly analogous position now. They’re dinosaurs.
Justin: What are the chances that a nuke is actually set off?
Doug: Well, the US is said to have three carrier battle groups offshore North Korea. That’s extremely provocative, as provocative as it would be if the Koreans had warships off the coast of California.
I think it’s incredibly stupid for the US to do that; it serves no useful purpose. The NK government can use it as propaganda, to show their subjects how aggressive the Americans are. It’s not a hard sale to make. The average American is unaware that during the Korean War, the US may have killed 20% of the NK population. The US totally flattened every city in the country with bombers. It doesn’t win friends in a primitive country when an alien race comes in and basically destroys everything you have. The memory doesn’t disappear overnight.
Provocations might push the North Koreans into doing something that they otherwise wouldn’t.
That’s one reason that a friend of mine who’s one of the richest, and certainly one of the most well connected, men in the world, thinks this is going to end badly. He’s quite thoughtful, and we’ve been friends for many, many years.
We were talking the other day; he spends a lot of time in the Orient, including Korea. He thinks there’s an 80 percent chance that there will be some type of nuclear exchange. That’s a high number. And it seems to me like a reasonable prediction based upon the psychologies of Kim Jong-un and Donald Trump.
Extremely dangerous situation, and who can say where it would end if there was a nuclear exchange. Or if the US decided to take out some nuclear facilities in North Korea using nuclear weapons.
Justin: Yeah, I can only imagine how quickly this situation would spiral out of control.
Doug: How can anyone predict what comes next when one nuclear bomb goes off in Korea? Perhaps they already have plans to deliver on their own nuclear devices in South Korea or Japan or for that matter in the US, likely using methods that we talked about earlier.
When that happens, the US would counterattack, and turn the place into a smoking ruin. Maybe the Chinese get involved because North Korea is right on their border.
These things can spin out of control in much the way trivial events before World War I spun out of control. And it seems to me that the world is a powder keg now, very much as it was before an accident set off World War I. The smart thing for the US is to withdraw their “tripwire” divisions from Korea, Japan, and elsewhere. All they’ll do is turn a regional conflict into WW3. And the 7th fleet sailing around the South and East China Seas? It’s analogous to the Chinese Navy holding maneuvers in the Gulf of Mexico.
It’s an idiotic conceit to say it’s “keeping the peace.” In fact it’s asking for trouble.
Justin: How would a nuclear exchange impact global financial markets? I can’t see it being the type of thing that investors brush off.
Doug: I can’t see how it could have any good ramifications at all, because if there’s a war, it’s going to destroy a huge amount of wealth, number one. Wars are all about killing people and destroying property. The longer it lasts, the worse it will be. The US has alliances with almost every government on the globe—with the obvious exceptions. The US Government is already bankrupt; they’ll borrow, inflate, and tax more if they expand their current wars. And become much bigger and more powerful.
It’s got to be a bad thing for the stock market. Even if a bunch of mushroom clouds don’t appear over US cities.
Furthermore, you don’t know who’s going to win the war, or what even constitutes winning for that matter. You remember what Einstein said when asked what weapons WW3 would be fought with? He said he didn’t know, but thought WW4 would be fought with sticks and stones.
I’ve always been a gold bug for lots of both economic and philosophical reasons—since gold was $35.00 an ounce quite frankly. And right now, in the midst of a stock market bubble, a real estate bubble, and a bond market super-bubble, the most important thing is preservation of capital.
So that’s why you buy gold. I think that there’s real upside in gold—although, in real terms, nothing like we’ve seen in the past. The main reason you buy it is to preserve capital. That keeps it simple.
You may not be able to preserve capital by owning cash, which is just fiat dollars, and holding it in banks, almost all of whom are bankrupt, all around the world. You can speculate in the stock market today, but at current levels, and with the world the way it is, it’s a speculation, not an investment.
That’s the problem with a highly politicized world. I’ll like the stock market more when it’s again yielding at least 5% or 6%. In the past, major markets have yielded in the 10-15% range at bottoms.
Justin: Absolutely. Of course, North Korea is just one of many reasons why investors should own physical gold if they don’t already.
Anyway, thank you for taking the time to speak me with today.
Doug: My pleasure, Justin.
Justin's note: Mark your calendar...Doug will be speaking at the Sprott Natural Resource Symposium next month. This is one of the year's top conferences, featuring some of the best minds in the business. You’ll find out about investment opportunities in mining and other natural resource plays…opportunities that you likely won’t hear about anywhere else. To learn how you can sign up today, click here.