Masterstroke or madness?
Donald Trump wants to curb Iran. Has he gone about it the right way?
He may have deterred conventional attacks, but goaded Iran to build a bomb faster
The killing of Qassem Suleimani by an American drone on January 3rd threatened to bring the United States and Iran closer to war than at any time since the hostage crisis in 1979. In a part of the world that has lost the power to shock, the audacious killing of Iran’s most important general, ordered by President Donald Trump, sent Iran reeling.
In public ceremonies millions of Iranians put aside their discontent with the regime to mark General Suleimani’s death. Blood-curdling threats of destruction issued from the Middle East, echoed by warnings of mayhem from Western experts. And yet a retaliatory missile strike on two American bases in Iraq five days later killed nobody. It looked like a face-saving attempt by Iran to wind the crisis down.
If that were the end of it, Mr Trump would be right to say that his strike had worked, as he suggested on January 8th. Ridding the world of a baleful individual and forcing Iran to curb its aggression really would be worthwhile achievements. In the coming months, that may indeed be how things turn out. The trouble is that nobody, including Mr Trump, can count on it.
Two tests will define whether the killing of the general was a success—its effect on deterrence and on Iran’s regional power. For the past year Mr Trump has stood by as Iran and its proxies attacked merchant shipping in the Strait of Hormuz, two American drones, oil facilities in Saudi Arabia and military bases in Iraq. Because it had concluded that there was no price to pay, Iran was becoming more brazen and belligerent.
The beneficial effect of the drone strike on January 3rd is to re-establish the idea that America is willing to hit back. Iran’s restraint on Tuesday this week signals that it does not want to face an aerial onslaught by America. Another Iranian missile strike is less likely today than it was just weeks ago.
And yet Iran’s thirst for revenge is surely not slaked. Even if they avoid overt forms of aggression, the Revolutionary Guards are likely to pursue other tactics, including cyber-attacks, suicide-bombings by proxies, assassinations of American officials and an array of means they have honed over the years.
These reprisals could take months to unfold. As the killing of General Suleimani recedes, Iran will once again begin to probe the willingness of America to use force. In an asymmetric world weak parties often retreat in the face of force, only to return. They have more patience and a greater tolerance of pain than a distant superpower does.
The second test is whether America’s strike weakens Iran’s grip on its neighbours. Iran has a network of militias, proxies and forward bases for its Quds Force, across an area that stretches from the Mediterranean to the Arabian Sea. This is about projecting Iranian power, regardless of the atrocities committed by its clients, such as Bashar al-Assad, who used nerve gas on his own people without a whisper of complaint from Iran.
General Suleimani’s death deprives this grim network of its architect and orchestrator. It is too soon to judge the calibre of those who are taking his place, but if the general was as exceptional as his reputation, then his loss will be felt. It may also deprive the Quds Force of funds. The Iranian state is desperately short of money. Ordinary Iranians have noticed that resources which are going on guns and mortars might be better spent on schools and hospitals.
But there are complications here, too. After the assassination, Iran is hellbent on pushing America out of the Middle East. It will start in Iraq, where it has mostly outmanoeuvred America. The government in Baghdad is dominated by Shia politicians in thrall to Iran. On January 5th Iraq’s parliament passed a resolution calling on the government to start evicting foreign troops, including 5,000 or so American soldiers.
The vote is not binding, many Iraqis resent Iranian influence, and American money and weapons are valuable to Iraq. Even so, it increasingly seems more a question of when, rather than if, the troops finally go.
Still more threatening is Iran’s nuclear programme. Mr Trump pulled America out of the agreement with Iran, signed in 2015 with six world powers, which limited its ability to get a bomb. He argued that he would be able to negotiate a better deal which also took in Iran’s non-nuclear regional activities—a proposal he repeated in his press conference this week. Last summer there was speculation that Iran was ready to talk. But that now seems out of the question, possibly for a long time.
Indeed, on January 5th Iran said it would no longer abide by any restrictions on the enrichment of uranium. It has every reason to indulge in nuclear brinkmanship not only as a bargaining counter against America, but also because, were Iran to get the bomb, it would permanently oblige America to change its calculations about using military force against it.
The lack of an American strategy for negotiation means that the general’s killing has reduced America’s Iran policy to extreme sanctions accompanied by an ill-defined threat of massive retaliation if the regime misbehaves.
Yet, starving Iran into submission is unlikely to work—other regimes have resisted American pressure for longer. There is no path to the peace Mr Trump this week said he wanted. Indeed, because America’s red lines are unclear, the danger of blundering into war remains.
Meanwhile, sanctions and deterrence will gradually become less potent, because they always do. If America wants its approach to be sustained, the price could well be repeated rounds of sanctions buttressed by sustained military counters to Iranian aggression—and an aerial campaign if Iran appears about to get the bomb.
Is Mr Trump prepared for that? Are his successors?
The wrong place at the wrong time
Both Barack Obama and Mr Trump realised that turmoil in the Middle East consumes American resources and attention that would be better focused on Asia. Mr Obama tried to negotiate his way out of the region and failed.
Mr Trump is trying to bully his way out instead, but he is likely to fail, too—because his strategy towards the regime in Tehran depends on America being present in the Middle East to contain Iran and maintain deterrence.
The dramatic assassination of General Suleimani may look like a gamble that has paid off in the short term. Unfortunately, it has not solved America’s Iran problem.
Our recent research suggests the US stock market may be entering a period of volatility that may include a broad market rotation/reversion event.
We believe this volatility event could begin to happen anytime over the next 10 to 30+ days.
The rally in the US stock market ending 2019 and carrying into 2020 appears to be setting up a “rally to a peak” type of price pattern. Please take a minute to review the following articles we’ve posted recently about this topic and how it relates to opportunities in Metals/Miners.
January 20, 2020: Q4 EARNINGS SETUP THE RALLY TO THE PEAK
January 15, 2020: SHIFTING UNDERCURRENTS IN THE US STOCK MARKET
The potential for a volatility spike resulting from a price peak formation (see the January 20, 2020 article above), could setup a moderately broad downside price reversion event that may prompt a 5% to 8%+ downside price correction.
If that happens, as we expect, over the next 5 to 10+ trading days, then precious metals and miners should explode to the upside as a “risk-on” trade moves capital into the metals market.
We believe the Miners (both Gold and Silver) are setting up for an explosive upside price move over the next 60+ days.
The reality of the global markets is that it appears to be setting up in a very similar manner to what happened in the late 1990s.
The rally in Rhodium, Palladium and Platinum are similar to the rally that took place in the late 1990s – just before the real explosion in Gold and Silver began in 2003-04.
The rally in Gold and Silver took place after a collapse event in 2000-2001 and setup a massive upside price event for Precious Metals and Miners. You can read more of our research below.
January 16, 2020: PLATINUM BREAKS $1000 ON BIG RALLY AND WHAT IS NEXT
December 30, 2019: METALS & MINERS PREPARE FOR AN EARLY 2020 LIFTOFF
GDXJ 10 Minute Chart (1 Month Data View)
If we start with the shortest time frame analysis of the gold miners you can see a lot of measured moves based on technical analysis that has taken place in the last month of trading and it’s not far from over based on this chart.
Daily GDXJ Chart
The setup in GDXJ is that Junior Gold Miners should move 15% to 25% higher over the next 30+ days on a price reversion event in the US stock market.
We believe the upside target for GDXJ is $46 to $51 from the current levels near $41.50.
After a brief pause near $50, GDXJ should attempt another rally to levels above $65 to $70 sometime near June~August 2020.
Weekly GDXJ Chart
This Weekly GDXJ chart highlights what we believe will happen over the next 6+ months.
The opportunity for skilled traders at this level is incredible.
Support near $35.50 has recently been retested and held.
Any entry below the $40 level is an incredible opportunity to catch this upside price move.
.
Concluding Thoughts:
We believe the US stock market will enter a period of volatility over the next 30~60+ days and that volatility will push metals and miners higher into this next wave of advancement.
Be prepared for Silver and Silver Miners to rally more than Gold/Gold Miners (potentially).
We’ve highlighted how Silver tends to rally a few months behind Gold when a Risk-On trade sets up.
As a technical analysis and trader since 1997 I have been through a few bull/bear market cycles, I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital.
The opportunities are massive/life-changing if handled properly.
2020 is going to be full of incredible trading opportunities for skilled traders.
We’ve already set up a number of active trading triggers for our members to profit from the early moves in 2020.
This Gold Miners trade is an incredible opportunity for anyone skilled enough to take advantage of it.
Visit Technical Traders Ltd. to learn how we can help you find and execute better trades in 2020.
We believe this volatility event could begin to happen anytime over the next 10 to 30+ days.
The rally in the US stock market ending 2019 and carrying into 2020 appears to be setting up a “rally to a peak” type of price pattern. Please take a minute to review the following articles we’ve posted recently about this topic and how it relates to opportunities in Metals/Miners.
January 20, 2020: Q4 EARNINGS SETUP THE RALLY TO THE PEAK
January 15, 2020: SHIFTING UNDERCURRENTS IN THE US STOCK MARKET
The potential for a volatility spike resulting from a price peak formation (see the January 20, 2020 article above), could setup a moderately broad downside price reversion event that may prompt a 5% to 8%+ downside price correction.
If that happens, as we expect, over the next 5 to 10+ trading days, then precious metals and miners should explode to the upside as a “risk-on” trade moves capital into the metals market.
We believe the Miners (both Gold and Silver) are setting up for an explosive upside price move over the next 60+ days.
The reality of the global markets is that it appears to be setting up in a very similar manner to what happened in the late 1990s.
The rally in Rhodium, Palladium and Platinum are similar to the rally that took place in the late 1990s – just before the real explosion in Gold and Silver began in 2003-04.
The rally in Gold and Silver took place after a collapse event in 2000-2001 and setup a massive upside price event for Precious Metals and Miners. You can read more of our research below.
January 16, 2020: PLATINUM BREAKS $1000 ON BIG RALLY AND WHAT IS NEXT
December 30, 2019: METALS & MINERS PREPARE FOR AN EARLY 2020 LIFTOFF
GDXJ 10 Minute Chart (1 Month Data View)
If we start with the shortest time frame analysis of the gold miners you can see a lot of measured moves based on technical analysis that has taken place in the last month of trading and it’s not far from over based on this chart.
Daily GDXJ Chart
The setup in GDXJ is that Junior Gold Miners should move 15% to 25% higher over the next 30+ days on a price reversion event in the US stock market.
We believe the upside target for GDXJ is $46 to $51 from the current levels near $41.50.
After a brief pause near $50, GDXJ should attempt another rally to levels above $65 to $70 sometime near June~August 2020.
Weekly GDXJ Chart
This Weekly GDXJ chart highlights what we believe will happen over the next 6+ months.
The opportunity for skilled traders at this level is incredible.
Support near $35.50 has recently been retested and held.
Any entry below the $40 level is an incredible opportunity to catch this upside price move.
.
Concluding Thoughts:
We believe the US stock market will enter a period of volatility over the next 30~60+ days and that volatility will push metals and miners higher into this next wave of advancement.
Be prepared for Silver and Silver Miners to rally more than Gold/Gold Miners (potentially).
We’ve highlighted how Silver tends to rally a few months behind Gold when a Risk-On trade sets up.
As a technical analysis and trader since 1997 I have been through a few bull/bear market cycles, I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital.
The opportunities are massive/life-changing if handled properly.
2020 is going to be full of incredible trading opportunities for skilled traders.
We’ve already set up a number of active trading triggers for our members to profit from the early moves in 2020.
This Gold Miners trade is an incredible opportunity for anyone skilled enough to take advantage of it.
Visit Technical Traders Ltd. to learn how we can help you find and execute better trades in 2020.
