Nuclear terror predicted by 3 major studies.
Here’s how it can impact your investments …

This is a shocking story of terror and panic. It begins in a small way in a place far away. And it could end in chaos that words alone cannot describe.

If you don’t have the stomach for it, you may decide not to read on.

But regardless of how far you read, be forewarned that it could all lead to a chain of events that changes our way of life for generations to come.

At a minimum, its impacts on our nation’s politics, economy and investments could be greater than anything we’ve written about since I founded this company 45 years ago.

Money and Markets researcher Anna Zakharchenko first wrote an article warning of these dangers five years ago, a time when no one in high places took it very seriously, even in the post 9-11 world.

Now, awareness is growing, albeit still not quickly enough.

But unlike many stories of terrorism, this one doesn’t begin on 9/11. Nor does it start in New York City. Rather, it starts on 9/13 — fourteen years earlier and 4,300 miles south-southeast of Manhattan.

Goiânia, 9/13/1987

Goiânia is just a short drive from the farm where I spent three years of my childhood in central Brazil. We visited regularly, and I feel like I can tell you this story almost as if I had been there myself …

Two junk dealers, Roberto Alves and Wagner Pereira, look for scrap metal they can sell. They get a wheelbarrow. They break into a shuttered radiotherapy clinic. And they cart off some old equipment to Alves’ home to take it apart.

A few hours later, they both start vomiting. Pereira gets diarrhea. His left hand swells up so badly he will later need an amputation.

But Alves doesn’t seem to care. He finds a shiny capsule and is determined to dismantle it. Three days after the theft, he’s finally able to puncture it with a screwdriver, revealing a deep blue, glowing light.

It’s so beautiful, he says, it must be extremely valuable, maybe even supernatural. He invites as many people as he can to come and marvel at the miraculous substance.

Leide de Neves, victim of nuclear contamination in Goiânia, Brazil.

They also find “star dust,” and 6-year-old Leide is enthralled. She spreads the particles on her body. Some even wind up in her sandwich. Days later, her upper body swells up, her kidneys and lungs destroyed.

More people get sick and die. The news is broadcast nationally. Panic strikes.

Nearly 130,000 people swarm local hospitals. At Leide’s funeral, 2,000 people riot. They fear her little corpse will poison the surrounding land. They try to prevent her burial with stones and bricks blocking the roadway to the cemetery.

Fatal contamination is spread to three of the city’s districts, including the busy airport, which is a regional hub. It’s found in homes, buses, cars and 50,000 rolls of toilet paper.

Goiânia businesses suffer a wave of order cancellations from other cities and states.

Goiânia visitors to other regions suddenly discover that their hotel reservations have been canceled. Cars with Goiânia license plates are stoned. Airline pilots landing at the Goiânia airport refuse to pick up passengers.

The economy of the entire region — including where I used to live and even the nation’s capital, Brasília — is affected.

Eight years go by, and the scene shifts to …

Moscow, 11/23/1995

Dirty bomb discovered in Moscow park

Chechen separatists build a crude bomb.

The bomb contains a mix of two ingredients: (1) the same substance that caused panic and death in Goiânia, and (2) ordinary dynamite. Total weight: 70 pounds.

The separatists hide the bomb in Izmailovsky Park, one of the biggest in Moscow.

Fortunately, they decide not to detonate it. Instead, they call a national television station and tell them where to find it. Their goal this time: Strictly to demonstrate to the world their ability — and willingness — to commit ruthless, unimaginable terror. The real thing, they say, will be saved for another place and time.

Tokyo, 3/11/2011

This episode truly strikes home. Like today, it happens on a Monday. Like today, it’s the 11th day of the month. And like nearly every morning, I awaken in the wee hours.

Minutes later, as I open my iPad, I see the shocking news: “8.9 QUAKE KILLS HUNDREDS IN JAPAN.” My mind flashes instantly to our son Anthony, who lives in Tokyo. Is he safe? How can I possibly reach him now?

I get my answers far more quickly than I expect, as I read these exact words in the same article …

Anthony Weiss, a 29-year-old from Florida studying Japanese in Tokyo, was on a train when the quake hit, shaking his passenger carriage sharply back and forward.

“People covered their heads with their bags as dust and small debris fell,” Weiss said. “Something sprung a leak, as there was a lot of water on the platform.”

Many riders evacuated the train and headed for the archways, but not Weiss. “I stayed on because I was concerned about the roof and hanging lights and ventilation systems,” he said. “Lights went on and off in the train. People were scrambling for the doorways. The aftershocks are continuing even now.”

But it’s the events that ensue after that fateful day that connect directly to our topic today: The quake’s near destruction of the Fukushima Daiichi nuclear plant … the spread of dangerous radioactive material to as far as Tokyo … including the same substance that caused widespread panic in Goiânia, that was used in the Moscow dirty bomb, and that could be used again in the not-too-distant future.

That substance is caesium-137. It’s widely found in medicine and industry. It’s highly radioactive for 30.7 years. It’s easily dissolved in liquids, rapidly spread in water, and fatal.

What’s worse, three just-released studies now lead to the conclusion that this substance — plus others like it — could be the target of the Islamic State (ISIS), al-Qaeda, or both together.

Study #1 is the latest update on the war against the Islamic State from IHS Inc., a major information provider to the aerospace, defense and security industries. With the map below, it documents how the terrorists have recently lost at least 22% of their territory in Syria and Iraq.

The colors in the map represent the status of each area one month ago compared with 14 months prior.

Green areas are territories newly conquered by the Islamic State during that period …

Black areas are those where there was no change, and …

Red areas represent turf the Islamic State has lost.

Why is this so important to us now? Because it’s primarily these losses that are driving jihadists back to Western Europe and beyond … prompting the recent attacks in Paris and Brussels … generating a new desperation for grandiose terrorist actions … and setting the stage for possible future acts of nuclear terrorism. The trends are now clear:

In Iraq, U.S. and Iran-backed forces recaptured Tikrit, the hometown of Saddam Hussein on March 31, 2015 … Sinjar, northwest of Baghdad on November 13, 2015 … Ramadi, the capital of Anbar Province also not far from Baghdad, in December of last year, and several villages south of Mosul, the Islamic State’s defacto capital city in Iraq, just a few weeks ago.

In Syria, Russian-backed government forces and U.S.-backed Kurdish militias have made similar gains. As a result, on January 26, 2015, the Islamic State lost Kobane, a Syrian Kurdish town near the border with Turkey … on March 27, they lost the ancient city of Palmyra (not yet reflected in the map) … and just this past Thursday, April 7, they lost control of their main supply route to Turkey northeast of Al-Rai.

The End of Social Security? Congress and President Obama just took a potential $60,000 in Social Security benefits away from you… That’s like losing two months’ worth of checks every year for the next 20 years. But, there is a small sliver of hope… The law leaves a short window of time open for seniors to claim their money — or lose it forever. That deadline is coming very soon.

External Sponsorship

Each reconquest is a notable victory for the global anti-terror alliance, which, whether they admit it or not, now includes not only the United States and its best friends, but also Russia and Iran.

Unfortunately, however, as we’ve seen in so many other so-called “missions accomplished,” “wars that ended,” and “great victories against terrorism” since 2000, each step forward by the West becomes the trigger mechanism for the next leap into infamy by the jihadists.

And in this case, every single advance against the Islamic State since January 2015 has merely driven more jihadists to target the West.

As the New York Times explains, “the United States and its Western allies are hitting the Islamic State hard in its bases in Iraq and Syria. The jihadist group may finally be on the defensive. But meantime, it is lashing out, taking its fight — and its struggle for supremacy among jihadists — global.”

Study #2, published in Foreign Affairs on March 29, predicts a future merger between the Islamic State and al-Qaeda, doubling the capability of jihadists to build and deploy dirty bombs. Author Bruce Hoffman cites several reasons why the merger is likely:

Shared ideology: Both movements share the view that the Western state system is inimical to the imposition of Sharia law. And like al-Qaeda, the Islamic State invites Western military intervention in Muslim lands, which, the group believes, will enervate the local regimes’ militaries and economies. “If you fight us,” the Islamic State proclaimed in 2014, “we become stronger and tougher. If you leave us alone, we grow and expand.”

Shared strategies: In fact, it’s the Islamic State’s adherence to al-Qaeda’s own playbook that accounts for its rush in June 2014 to declare the resurrection of the caliphate.

Their own public declarations: The Islamic State portrays itself as the most faithful embodiment of Osama bin Laden’s vision. Despite personal rivalries with bin Laden’s successor, its propaganda is profoundly reverential of bin Laden and deeply respectful of al-Qaeda.

Meanwhile, al-Qaeda has also been very careful in its public statements to hold out the prospect of reconciliation. In a September 2015 statement, for example, al-Qaeda’s leader announced:

“If there is fighting between the Crusaders … with any group from the Muslims and the mujahedeen, including the group of Abu Bakr al-Baghdadi [the Islamic State],then our only choice is to stand with the Muslim mujahedeen.”

Study #3, published last month by the Harvard Kennedy School, is both the most authoritative and the most frightening.

The study documents progress in global security measures to safeguard nuclear warheads. But with regard to fatal radioactive materials like caesium-137, it’s their dangers that prevail.

In the study’s own words …

Al-Qaeda: “Had a focused nuclear weapons program and repeatedly attempted to buy stolen nuclear bomb material and recruit nuclear expertise. Went as far as carrying out crude tests of conventional explosives for their nuclear bomb program in the Afghan desert.”

Islamic State: “Has more money, controls more territory and people, and enjoys a greater ability to recruit experts globally than al-Qaeda at its strongest ever had. The group’s apocalyptic rhetoric, envisioning a final war between itself and the ‘crusader’ forces, suggests a need for very powerful weapons, and recent incidents such as the in-depth monitoring of a senior official of a Belgian facility with substantial stocks of HEU [highly enriched uranium] are worrying indicators of possible nuclear intent.”

Faulty plans: “Current U.S. plans for HEU removals would leave tons of U.S.-origin HEU in foreign countries, primarily in Europe.”

Huge stockpiles: “Global stocks of civilian separated plutonium are immense, but few current efforts are targeted either on minimizing these huge stocks or reducing the number of locations where they are stored and handled.”

Widespread complacency: “Officials and nuclear managers in many countries still tend to dismiss the threat of nuclear terrorism. Many have little awareness of the specifics of past terrorist nuclear ambitions and activities or of real incidents of nuclear theft and sabotage.”

Impact on Your Investments

Now, finally, five years after Anna first published her warnings, world leaders are beginning to consider these dangers more seriously. That’s a good thing.

But global investors are also starting to incorporate the dangers into their decision-making, and …

International capital flows are beginning to reflect these fears.

This is not the only reason that so much money has fled the euro, flowed into the U.S. dollar, and most recently, rushed into the relative safety of the Japanese yen. But someday, when you least expect, it could become the main reason.

Remember the sheer panic that a minuscule amount of radioactive material caused in Goiânia 28 years ago.

Then imagine the panic that could be caused by a deliberate attack of far greater dimensions. Perhaps in New York, Paris, London, or Moscow — all cities that have already been targeted not just once, but repeatedly.

Think about the new anti-terror laws that would be passed, the new executive orders unveiled, the new wars unleashed.

And imagine the chaos. The panic in financial markets. The tsunami of flight capital to a safe-haven country. The explosive demand for precious metals.

This is not a trend you can predict; it’s the ultimate Black Swan event.

Nor is it something you can easily prepare for specifically. The only reasonable approach is to continue doing what we’ve been recommending all along: Safety. Cash. Hedges against stock market declines. And hard assets.

For more specific instructions, see My 7-Step Portfolio Protection Strategy.

And to put this terror story into the extremely timely context of U.S. politics, also read my commentary in Is the GOP Collapsing? plus What could be worse than the Great Depression?

Good luck and God bless!

Martin

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