The U.S. was in a serious financial and cyberwar with Iran in 2012 and 2013. The U.S. and Israel were giving consideration to military attacks on Iran in order to disable Iran’s uranium enrichment program. At the end of 2013, President Obama reached a truce in exchange for Iran entering into negotiations on their efforts to develop nuclear weapons.
Eighteen months of negotiations led to the 2015 Joint Comprehensive Plan of Action, JCPOA, among Iran, the U.S., the U.K., Germany, France, Russia and China (the “P5 +1”) and the EU. Under this agreement, Iran agreed to stop its nuclear enrichment activities in exchange for sanctions relief and funds estimated at over $50 billion, mostly in the form of frozen bank accounts that were unfrozen.
In addition, the U.S. delivered about $1.5 billion in physical cash and physical gold to Iran on pallets flown to Tehran. Most of that money was used to finance warfare and terrorism in Yemen, Gaza, Lebanon, Syria and Sinai.
This resolution seemed to reduce the risk of war in the short run. However, Iran’s compliance was difficult to monitor and in some activities such as missile testing, Iran was violating the spirit of the agreement. When Trump became president, he terminated the JCPOA and led an effort to reimpose financial sanctions on Iran.
This also marked the start of a new financial war. According to this article, the shooting war option may also be back on the table. Although there has been some good news coming from the North Korean negotiations lately, the news seems to be getting worse in Iran, Ukraine, Syria, Venezuela and the South China Sea.
While it may be impossible to forecast exactly where war will break out, it’s easy to forecast it will break out somewhere soon, simply because of the large number of danger zones. Investors should prepare accordingly with increased allocations to cash, gold and Treasury notes.
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