We know inflation is coming due to central governments around the world printing up trillions in new currency in an attempt to pull out of this global recession.  Inflation will send gold prices much higher.

In addition, gold is known as the crisis commodity and we have certainly seen geopolitical risk picking up lately.

A mad man dictator in North Korea just set off a nuclear device and shot off a few missiles.  Kim Jong Il wouldn’t hesitate to sell a nuclear device to a terrorist.  Even China is running out of patience and the world is about to turn the screws on the North Korean regime.

The North Korean people need to get rid of that evil regime which ran their country into the ground, and embrace freedom and democracy.

What’s more, Iran is continuing to irritate the civilized world and further isolate itself by developing nuclear weapons, rather than focusing on their faltering economy.

There is a good chance that Israel will attack Iran’s nuclear facilities if the hardliner Iranian President Mahmoud Ahmadinejad is re-elected next month.

Hopefully, the Persian people will take this opportunity to elect moderate political leaders so we can avoid a major war in the region.

War with Iran could easily escalate up to the use of nuclear weapons.  Iran will become a glass parking lot and gold will be over $5,000 per ounce.

Then, you have the Taliban which is trying to take over nuclear armed Pakistan.  Do you think the Taliban would even hesitate before starting World War III?

Higher inflation and geopolitical risk are just two reasons to own gold.  Make sure a portion of your investment portfolio is in the yellow metal.

Source:Next Stop for Gold is $1,000 Per Ounce!

Not that it ever really left, of course. Preoccupied with a sea of financial troubles, the world had simply put it out of sight and out of mind for a while.

Now, with all the thundering force of an underground nuclear explosion, our heads are turned to the globe’s unstable flashpoints once again…

North Korea: “Look at Me”

In North Korea, the Kim Jong Il Regime has just conducted a fresh nuclear test (and fired three short-range missiles). “World leaders reacted with outrage,” according to CNN, in response to the unlawful test. The U.N. Security Council held a special emergency session to “condemn” the move.

“North Korea is directly and recklessly challenging the international community,” U.S. President Barack Obama said. The president added that “It [North Korea] will not find international acceptance unless it abandons its pursuit of weapons of mass destruction and their means of delivery.”

Therein lies the rub. In reality, North Korea doesn’t give a damn about international acceptance. What Western leaders do not say, but quietly recognize, is that all their peaceful plans and prescriptions for North Korea are viewed as poison pills by the Kim Jong Il regime.

To understand the situation, put yourself in Kim’s shoes for a moment. Were North Korea to act logically and responsibly in the eyes of the international community, gushers of aid would come flooding in. Treaties would be signed… borders would open… the country would begin to heal… and the totalitarian machine that has crushed North Korea beneath its fist for decades would be swept away in a sea of populist uprising, its leaders thrown in jail to rot for war crimes against humanity.

That is to say, thrown in jail or shot like dogs. Or perhaps hung like common thieves. North Korea’s leaders have CNN too – they saw what happened to Saddam Hussein. Does anyone imagine they really intend to let the same thing happen to them?

The Kim Jong Il regime is crazy, but not suicidal. Their tendency towards self-preservation explains why they hang on to the nuclear option with a death grip. It’s their only form of insurance against getting turfed out like Saddam. That further explains why North Korea is unlikely to actually unleash a nuclear attack on a rival power.

But North Korea is a huge headache for the rest of the world nonetheless. While the regime is unlikely to use weapons of mass destruction, it can certainly sell blueprints and materials to the highest bidder. If some aspiring terrorist leader – a sort of Bin Laden 2.0 – had the cash and contacts to make something happen, Kim Jong Il & Co. would be high on his list of folks to see.

Some hope that if we only wait long enough, North Korea will eventually collapse of its own accord. But that isn’t a very attractive option either. For one thing, a true collapse would again mean the bloody end of the regime – and there’s no telling what a nasty dictator at the end of his rope might do.

What’s more, China lives in quiet fear of a mass influx of North Korean refugees (as does South Korea). Such a flood of terrified, impoverished North Koreans could be economically and politically devastating for the border country forced to receive such an influx on short notice.

Iran: “Us Too”

Somewhat overshadowed by the North Korea news, Iran has made moves of its own that would have surely dominated headlines in any other news cycle.

Earlier this month, Iran test-fired a surface-to-surface missile with a 2,000 km (1,200 mile) range, according to Reuters – far enough to reach U.S. and Israeli military bases in the region.

In further escalation, Admiral Habibollah Sayyari announced this week that “Iran has dispatched six… warships to international waters and the Gulf of Aden region in an historically unprecedented move by the Iranian Navy.”

As you can see, North Korea isn’t the only country that wants attention…

“Iranian waters stretch along the Gulf, the Strait of Hormuz and the Sea of Oman,” Reuters goes on to add. “Iran has threatened to block the Strait of Hormuz, through which about 40 percent of the world’s oil is shipped, if it were attacked over its nuclear program.”

Once again, this isn’t a case where the West can just ask Iran to play nice. It’s a game of high stakes poker in which Iran is determined at all costs to reach its goal – full-scale nuclear capability – and is willing to openly threaten 40% of the world’s oil supply in order to achieve that goal.

Israel: “We’ll Be Ready”

And the country watching Iran with the wariest eye of all? That would be Israel.

Next week Israel will be conducting a five-day drill, dubbed “Turning Point 3″ by Home Front Command. The drill is meant to prepare Israel’s rapid-response capability in the event of simultaneous missile strikes and terrorist attacks, the Jerusalem Post reports.

On the third day of “Turning Point 3,” a siren will go off “throughout the entire country,” at which point all citizens of Israel will head to the nearest bomb shelter (or makeshift equivalent). Suggested reaction times vary by region – from less than 30 seconds in the Golan Heights to a full three minutes in Jerusalem.

“This isn’t an imaginary situation,” says Israel Deputy Defense Minister Matan Vilnai. “This isn’t detached from reality and if there is a war, it’s very likely that this is what will happen.”

According to a poll released by Tel Aviv University on Sunday, 51% of Israeli citizens back an immediate strike on Iran’s nuclear sites. The other 49% prefer awaiting the outcome of U.S. negotiations. That mix could change quickly, obviously, depending on how future events unfold.

To further ensure readiness, in the past ten days the Israeli air force has held drills simulating “all-out war.” Again according to the Jerusalem Post: “Fighter jets, cargo planes and missile defense systems of the corps took part in the drill where defense from a simultaneous attack against Israel from the south and north was simulated.”

Make no mistake – there are some real storms brewing here. And we haven’t even touched on other flashpoints like Pakistan, Venezuela and Nigeria… tomorrow we’ll take a closer look at what this all means.

Source: North Korea, Iran and Israel – The Return of Geopolitical Risk

And I’m going to tell you what that secret is.

Stop making the same mistake most Westerners make. Don’t waste your time trying to figure out just where China will fit into our future. Instead, try and figure out where we will fit into theirs.

That’s more than an exercise in semantics. Think of it more as an investment screen that will determine which countries from “our world” will advance enough to be relevant to China’s future. Those are some of the companies that you’ll want to go with – the companies that will profit “from” China without having to actually be Chinese companies.

The problem with trying to figure out where China’s headed is that the changes are just too dramatic. I mean, 35 years ago China was like North Korea is today; 30 years ago it was like Cuba. Now it’s like no place on the planet.

That’s why the so-called “Panda bashers” – who view this as one huge economic train wreck that’s just waiting to happen have got it all wrong.

Look, I’m not saying that there won’t be challenges or corrections along the way – indeed, we’ve been experiencing just that over the past few months – but one visit here is all it takes for a person to fully understand that the proverbial genie is out of the bottle, and there’s no putting it back.

The Big Buildup

The first thing you’ll notice here is that China looks like one big construction zone. There hasn’t been an infrastructure boom like this one anywhere on earth since the Marshall Plan reconstructed much of Europe after that region was devastated by World War II.

Everywhere you look you see piles of building materials – bricks, pipe, cable, wiring, lumber and glass (and that’s merely a sampling) – just waiting to be installed in buildings all over this capital city. Some will renovate small family housing units in Beijing’s ancient and narrow hutongs, while much of the rest will give life to the modern new high-rises reaching skyward from the construction sites arranged like chessboard squares in almost every key city here in China.

It seems like the entire country is going “up,” which is why I was not surprised to hear from one of my local contacts that as many as 50% of the world’s high gantry construction cranes are now being used in China.

The East Coast city of Shanghai – with its modern, almost-Western atmosphere – already has more than 4,000 skyscrapers; that’s twice as many as New York City, and Shanghai has another 1,000 on the proverbial drawing board.

China’s also going “out.” And in every direction.

In the late 1980s, Beijing had only two beltway-style “ringed” highways encircling the city. Now it has six – to serve the 14.5 million people who live here.

Two decades from now, China will have more than 50,000 miles of freeways – more than our entire interstate system – and even that won’t be enough.

Incomes are on the march. Everywhere I’ve been in recent days, I’ve seen my share of Gucci, Dior and Rolex – and not just the “knockoffs.” As we’ve reported repeatedly, China’s consumers are becoming more and more brand-conscious, especially in the first-tier cities like Beijing and Shanghai (Money Morning editor Bill Patalon has dubbed this “The Baywatch Effect,” and only partly in jest), but also in second- and third-tier cities, as well.

The escalation in traffic has been breathtaking, simultaneously choking the roads and the pedestrians on the sidewalks. And it’s only going to get worse.

In 20 years, China will have more cars on its roads at any one time than we do in our entire country, running or parked. At the moment, Beijing alone is adding 14,000 vehicles a day to its rolling roster.

If all these new cars were the small, economical, fuel-efficient cars you typically see in emerging economies, that would be one thing. But the growth in incomes and in wealth has enabled many China consumers to buy luxury cars, just as they buy luxury goods.

On this trip, shiny black Audi A6s (at $43,000 to $73,000 a copy in the U.S. market, depending upon the model and options picked) in particular seem to be ubiquitous. So are Buick sedans. I’ve even spotted a few Hummers.

If you look at several of these brands – Audi, Buick and Hummer – you’ll get a poignant illustration of how well it pays off to become part of China’s future, and the risks of waiting for that country to become part of yours.

Here’s what I mean.

The “Secret” Pays Off

Let’s first look at Audi. Some of the Audis are being built by a China operation managed by Volkswagen AG. VW became one of the first foreign companies to begin manufacturing facilities in China when it started operations there in 1982. Audi AG and both VW long ago decided to make itself part of China’s future – and now it’s reaping the rewards. The German carmaker actually holds a 10% stake in the FAW-Volkswagen Automotive Co. Ltd. operation that produces the Audi cars in China. And  Audi just this week announced plans to expand its dealer network in China from the current 132 to 220 by 2012, underscoring again the importance it places on that market.

Hummers are appearing because they confer status on China’s “new money crowd.” If you have a Hummer, everyone knows you’re successful. There’s a real value in that in most societies – and China, where status is important, is certainly no different.

But Buicks? That one doesn’t quite compute, yet. You see, when it comes to China, my sense is that parent company General Motors Corp. (GM), was a bit late to the party – like most U.S. carmakers – in terms of embracing the reverse mindset of success that I outlined above.

But at least they’re working to redress that. For instance, GM last fall announced plans for a new $250 million research-and-development center in Shanghai. The facility will serve as GM’s headquarters in the China and Asia-Pacific regions, and will work on China’s pollution problems through research on such eco-friendly technologies as alternative fuels, hybrid cars, and more-efficient power trains, including those utilizing new technologies.