KW: Jim Rickards has been writing for months about the coming pivot by the United States away from China and toward Russia in terms of our key strategic alliances. The U.S. has insisted that China will not have access to its artificial “islands” in the South China Sea. President Trump has said that the “One China” policy of the U.S. is on the table and that the U.S. will possibly recognize the sovereignty of Taiwan — something that is completely unacceptable and non-negotiable to Red China. There are other hot spots involving North Korea, export subsidies, tariffs and currency manipulation that are increasing U.S.-China tensions. Now we learn that Trump’s closest political adviser, Steven Bannon, senior counselor to the president, has already predicted a war with China starting in the South China Sea. Bannon said, “We’re going to war in the South China Sea… no doubt.” Admittedly, this forecast was made before Trump’s election and was a long-term forecast, not an immediate warning. Still, such comments do not go unnoticed in Beijing. A conflict between the U.S. and China would be the most momentous confrontation since the end of the Cold War, in 1991, with enormous consequences for investor portfolios. While the exact path and timing of such a conflict may be unclear, it’s not too soon to start building a defensive allocation in your portfolio just in case. The single best asset class for the coming conflict is gold. When trade and monetary cooperation between the U.S. and China break down, gold will re-emerge as genuine world money, as it has many times before.

Only months ago Donald Trump’s chief strategist predicted military involvement in east Asia and the Middle East in Breitbart radio shows

Source: Steve Bannon: ‘We’re going to war in the South China Sea … no doubt’ | US news | The Guardian