Twenty years after the hand off of long-time British colony Hong Kong to China, the situation there continues to demonstrate why the world is too close for comfort to conflicts between China and the U.S.-led Western world order. Not coincidentally, this was also the week that the news emerged of a new massive arms package deal between America and Chinese arch-enemy Taiwan.

This fantasy idea that the Chinese will simply accept democratic and breakaway regions of their so-called superstate has no basis in reality. You better protect your retirement portfolio and assets with a Gold IRA while you still can. Gold remains the best historically proven means of defense for your financial future. Time to review what gold goes in an IRA.

People of Hong Kong Increasingly Becoming Anti-Chinese In Sentiment

As Chinese President Xi Jinping flew into Hong Kong to swear in their new leader this past Saturday, he brought with him a thinly veiled warning about how much anti-Chinese central government rhetoric and actions the mighty mainland state will tolerate.

In his half an hour of threatening remarks after swearing in the new leader, Xi hammered away on several stern themes:

  • Beijing will not tolerate any threats to its authority from this starkly divided wealthy city on the twentieth anniversary of the British handover to the mainland regime
  • The Hong Kong government needs to focus on both Chinese security concerns and maintaining the unified country’s national sovereignty
  • The island enclave had best not attempt to engage in sabotage and infiltration of the mainland with its ideas on freedom

President Xi underscored these tough warnings in his remarks:

“Any attempt to endanger China’s sovereignty and security, challenge the power of the central government… or use Hong Kong to carry out infiltration and sabotage activities against the mainland is an act that crosses the red line and is absolutely impermissible.”

The Chinese president has reason to be concerned. The polls paint an increasingly worrisome picture of sentiment in the wealthy enclave as more and more Hong Kongers claim to feel betrayed by China. Thousands were protesting both before and after the leader’s arrival. Obviously the so-called “One Country, Two Systems” idea is not working out well for the ultra-Western people and city of Hong Kong.

Chinese President Xi Jinping. Photo Courtesy of Getty Images

As many as 80 percent of the citizens aged 29 and younger feel no connection with the mainland Chinese after 20 years under their rule. Anti-China sentiment continues to rise amid all age groups in Hong Kong, but most especially in the younger generation, contrary to what Beijing had hoped would occur over time.

September of 2016 saw the most recent vote for the Legislative Council. Besides the long standing pan-democratic and pro-Beijing parties, disruptive new candidates won seats campaigning on localism and independence for Hong Kong for the first time in the island’s history. This contrasts markedly with the first Legislative Council election under Chinese rule from May of 1998. In the early days of Chinese rule, two thirds of the floor was controlled by the pro-Beijing groups while only a third hailed from the pro-democracy parties.

The struggle has only begun as the formerly British enclave is rife with demands for total democracy and even calls for independence from the mainland. This last subject is unforgivable anathema to China, which waited from 1897 till 1997 for the hundred year lease to Great Britain to expire so that it could regain control over the now fantastically modern and wealthy regional business hub. Yet this is only one of several thorny issues souring relations and perhaps eventually leading to an armed military conflict between the United States, Britain, and other allies against China on the other side.

Taiwan’s Pro-Independence Government Gains Confidence and Advanced Weaponry

One of the other more troubling problems between China and the West surrounds the issue of Taiwan, or Formosa as the Chinese stubbornly continue to call the breakaway island state. Taiwan is a unique product of the Chinese civil war that saw the Communist leadership of Mao Tse-Tung triumph over the then-ruling nationalist party of Chiang Kai-Shek. The nationalists fled with the country’s money, weapons, and as many art treasures as they could manage from Beijing to what became the fortress island nation of Taiwan.

Since that fateful day in 1949, Taiwan has exercised and maintained de facto independence in everything but official recognition from the international community. Staunchly supported by the United States in continuing weapon sales and a military alliance over the years, the governments of Taiwan have vacillated from friendlier relations with the mainland government to today’s frosty lack of dialogue with the pro-full independence President Tsai Ing-wen who gained power in Taiwan only last year.

Graph Courtesy of U.S.-Taiwan.org

As timing would have it, the U.S. announced a new $1.42 billion package in high technology arms sales to Taiwan exactly the same week as the tensions between China and Hong Kong reached a fever pitch. This package contains advanced weaponry including high-speed anti-radiation missiles, missile components, torpedoes, and early warning radar technical support.

The Chinese response has been that the government is “furious.” This package is only the latest to be announced since former U.S. President Barrack Obama green lighted a similar arms deal of $1.83 billion at the end of 2015 which included amphibious attack vehicles, two navy frigates, and anti-tank missiles. The U.S. support of Taiwan is critical for the relatively small island nation since only the United States supplies it with weapons and military technology out of all the countries in the world.

Taiwan Is the Critical Flash Point to Watch In the Growing Rift Between China and the West

An armed conflict between Beijing and Taipei would be a tragedy for not only both nations but the entire world, yet this is not at all outside of the realm of possibilities. White House Chief Strategist Steve Bannon has opined that “We’re going to war in the South China Sea in five to 10 years.”

Meanwhile in Taiwan, the Taiwanese President Tsai heads up the independence movement party that will never sign off on mainland China’s “one China” non-negotiable policy. She took the opportunity on Friday to announce that the planned weapon sales from the U.S. only improves Taiwan’s confidence and its ability to maintain stability and peace across the Taiwan Strait. To add insult to injury to the Chinese, this is only the first of seven different weapons sales the  Trump administration has announced to Congress. This chart below shows you that Taiwan is one of the largest weapons’ buyers in the entire world, even ahead of India:

Graph Courtesy of CNN

Meanwhile the Chinese are livid with rage at this latest bolstering of their arch-enemies the Taiwanese. The Chinese ambassador in Washington D.C. stated:

It sends the “Taiwan independence” forces the very wrong message. “The Chinese government and Chinese people have every right to be outraged.”

China called this arms deal the “wrong decision” to sell arms to Taiwan. The behemoth nation has never renounced its right to employ force to restore control over what they regard as the breakaway island province. The Chinese Defense Ministry further opined:

Taiwan is “the most important, most sensitive core issue in Sino-U.S. ties.” They warn the United States to cancel such planned sales in order to not further damage the stability and peace in the Taiwan Strait.

It is not the damage to peace and stability in the Taiwan Strait you have to worry about, but a wider conflict that engulfs potentially half the world and endangers enormous amounts of trade and commerce.

Gold Prices Well Supported By Potential for Sino-American Block Conflict

Though you don’t hear much talk about it, the growing possibility and even likelihood of armed conflict between the United States and its Asian allies versus China definitely supports gold prices. The number of nations in Asia who are unhappy with or afraid of the rising influence of China is significant. Both the Philippines and Japanese have territorial conflicts with the Chinese over disputed islands and territorial waters. Singapore also has issues with their big brother neighbor to the north.

The South Koreans remain frustrated that China won’t use its influence over North Korea to resolve the latest brewing peninsular conflict crisis with Kim Jong-Un over ballistic missile and nuclear weapons threats. In fact you would be hard pressed to find a single nation that honestly loves China and its aggressive imperialist overseas policy the communist nation has pursued for a number of decades now.

With only 170,000 tons of gold unearthed in all human history, you can not afford to take these growing and persistent threats of mercantile and armed conflict lightly. A huge portion of this gold is consistently locked up by the world’s various central banks. Much of the rest is already held by ETF exchange traded funds and investment pools. The coming Chinese versus the West conflict is a serious reason for why you should own gold in times of financial crisis. Never forget that gold offers protection and insurance during market turbulence.

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