Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Giant Financial Risk You'll Never Hear About on Television

Commodities / Crude Oil Mar 13, 2010 - 06:09 PM GMT

By: DailyWealth

Commodities

Best Financial Markets Analysis ArticleMatt Badiali writes: From 20 miles in the air, the Musandam Peninsula doesn't look like much.

Sparsely populated and dominated by the Al Hajar mountain range, little happens on the Musandam that matters to the outside world. Some fishing, tourism, and petty smuggling are about all that goes on in this tiny region belonging to Oman, the southeastern-most country on the Arabian Peninsula.

But the desolate landscape belies the Musandam Peninsula's critical role in global politics and industry...
 
The U.S. government has a massive contingency plan to defend the area... and investors must pay close attention to the peninsula for the same reasons our government does.
 
Investors must know about the Musandam Peninsula because it juts out into a waterway locals know as Tangeh-ye Hormoz. For thousands of years, this waterway has held vital strategic significance for regional powers looking to control sea access to the Arabian Peninsula, the Persian coast, and ancient Mesopotamia.
 
Notice... I said "regional," not global. Neither the U.S. nor any other significant economic power obsessed over it until the dawn of the hydrocarbon age, around 100 years ago.
 
Nowadays, the the Tangeh-ye Hormoz is one of the world's biggest geopolitical trump cards... and it poses a great threat to your financial wellbeing.
 
You see, this body of water serves as the transit point for more than 16 million barrels of oil per day... more than 40% of the world's daily consumption and 64% of the oil produced in the Middle East. More oil flows through this area daily than is consumed by China, India, Japan, and Germany combined.
 
The Musandam Peninsula is the constriction point that "chokes off" the waterway Westerners now call the Strait of Hormuz. And the regions it controls sea access to? That's modern-day Saudi Arabia, Iraq, and Iran. This makes it the most important waterway in the entire world.
 
 
The Strait of Hormuz is also Iran's trump card in its desire to go "nuclear."
 
The great concern here for the U.S. government – and investors – is that Iran could use boats, missiles, mines, or a combination of all three, to attack oil tankers in the Strait... just in case Iran is attacked. Even a small success here for Iran could send the price of oil past $200 a barrel... which would strangle our fragile economic recovery.
 
The potential solutions to this problem on the table right now are: 1) The U.S. attempts to knock out Iran's nuclear capabilities. 2) Israel attempts to knock out Iran's capabilities. 3) We bluster and clench our fists, then ultimately allow Iran to have nuclear capabilities.
 
It's the biggest "darned if you do, darned if you don't" situation in the world. Here's why...
 
An attack designed to destroy Iran's nuclear capabilities isn't 100% guaranteed to work. We don't have complete intelligence on the locations and extent of Iran's facilities. Even if the world knew exactly where all the facilities were, we couldn't be sure attacks would take them out completely. You'd have to invade the country and inspect the damage from up close.
 
Less than 100% isn't good enough here. A failed attack would immediately place Iran into "war mode," which would destabilize the Middle East and enrage the Muslim world... something the U.S. doesn't want. One of the first moves for an Iran in war mode will be an attempt to shut down the Strait of Hormuz.
 
An attack would also send lots of young Middle Eastern men and money running for the terrorism business. America has worked too hard, risked too many soldiers' lives, and spent too much money to risk a terrorism renaissance.
 
So if an attack fails, you'll have a terrible version of what I just described. If you don't attack, you have a nuclear-armed Iran. Like I say, darned if you do, darned if you don't.
 
I think diplomacy is the likely outcome here. But you're crazy not to buy some financial insurance in case this situation is not resolved without missiles. After all, we're talking Israel, Iran, and the U.S. here. These nations did not get where they are today by sending Hallmark cards and asking "pretty please."
 
If this conflict goes "hot," SAFE oil and gas assets will soar in price... the kind far away from the Middle East and its problems. In tomorrow's essay, I'll tell you the simplest and easiest way to buy them. In the case of a Middle Eastern conflict, this will beat the pants off gold for "crisis insurance."
 
Good investing,
 
Matt Badiali


http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in