Make Kitco Your Homepage

Confusion over North Korea's Kim Jong Un being seriously ill shakes markets, gold price

Kitco News

Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

(Kitco News) The global marketplace was shaken once again Tuesday following unconfirmed reports that North Korea’s Kim Jong Un is seriously ill. The news comes just a day after significant market uncertainty was triggered by a major collapse in oil prices.

U.S. officials with direct knowledge of the issue were cited by CNN as saying that U.S. was “monitoring intelligence” that Kim is in “grave danger after a surgery.”

The reports began circulating after the north Korean leader missed a celebration of his grandfather’s birthday on April 15.

Unnamed American officials confirmed to NBC News Tuesday that Kim recently had cardiovascular surgery, with some others adding that the North Korean leader could be incapacitated.

However, there is still a lot of confusion regarding the state of Kim’s health. A Chinese Communist Party International Liaison Department official told Reuters Tuesday that Kim is not believed to be critically ill.

More reports added only more questions. NBC News cited South Korea’s presidential office as saying: “We confirm that Chairman Kim Jong Un is currently touring provincial areas with his close aides and we do not detect evidences to support speculation about his ill health.”

President Donald Trump’s national security adviser Robert O’Brien told Fox News on Tuesday that the White House is “monitoring these reports very closely.”

The political succession is too early to talk about, added O’Brien. “The basic assumption would be maybe it would be someone in the family. But, again, it’s too early to talk about that because we just don’t know what condition Chairman Kim is in and we’ll have to see how it plays out,” he said.

Kim is believed to be in his thirties and have an older brother and a younger sister, BBH Global Currency Strategy said Tuesday. He is also thought to have a young daughter. “The dynastic process has always been opaque in Pyongyang, but with no clear successor groomed, a power struggle is quite possible,” noted BBH.

The ripple effects in the marketplace were already being felt when trading began Tuesday morning.

The Korean won plunged Tuesday against the U.S. dollar, last down 0.87% on the day. U.S. equity markets opened lower, still shaken by the oil price collapse witnessed on Monday. The Dow was last down more than 500 points on the day. Gold prices first declined but then started to climb back up with the June Comex gold futures last at $1,702.20, down 0.53% on the day.

More market uncertainty could definitely be in the cards if the reports are confirmed, which is beneficial for gold, Blue Line Futures chief market strategist Phillip Streible told Kitco News Friday.

“There has been turbulent times with Kim, but it seems like the market got accustomed to his temperament and it seems the market has stabilized when it comes to North Korea. But if something unfortunate did happen to him, there could be a quick transitioning regime change. And something like that occurring provides a lot of uncertainty in the market and that could be part of the reason why we saw gold futures come back off from their lows on the safety bid,” Streible said.

The major concern is around a possible power vacuum developing, said chief market strategist Marc Chandler of Bannockburn Global Forex. “The concern is about a potential power vacuum and the command and control of North Korea's weapons,” Chandler noted.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.