-- Posted Friday, 14 July 2006 | Digg This Article
In retrospect it was easy!
Those who bought Gold and Oil or those that Shorted Stocks made out like Bandits.
The Great majority got crushed!
To say that World War 3 was caused by the kidnapping of an Israeli soldier is like saying World War 1 began with the assassination of Archduke Ferdinand. Both instances utterly confuse the spark with the bonfire that was waiting to ignite.
The prevailing mood in 2006 was one of excess.
Here at home, the first half of the year was characterised by a population infatuated with House prices to the exclusion of everything else.
A geo-political situation had been brewing for some time. The US War in Iraq was widely recognised if not as a failure then as a Big disappointment.
The only worry in the minds of the general populace was the relentless rise in the Price of Oil.
What is widely recognised today (but not evident then) is that Palestinian terrorists were merely puppets of their Iranian terror masters whose influence and control was exercised via Damascus.
It is now clear that Iran’s goal was to bait the US into a military escalation at all costs. Whether it was through antagonism of Israel or through the sponsorship of incursions into Iraq or both, Iran was clearly ready for bigger things. The complacency exhibited by the Powerhouses of China and Russia can only be interpreted as tacit approval. As if on que, the tiny nation of North Korea thumbed its nose at the US by firing long range missiles into the Sea of Japan. It was more of the same, bait and escalate.
The motives were clear for all to see even during that June of 2006. The age old clash of civilizations was rearing its ugly head towards a showdown.
The crash that followed took most by surprise.
As was evident to her enemies but not to the average man in the street, the massive Debts of the once almighty United States proved to be her undoing.
A low scale military war had been waged for many decades against her but the bite began on September 2001. The US was in no position economically to fight a long protracted war never mind a war on many fronts. It was such a war she found.
The debt balloon was already showing cracks by July of 2006. The massive flow of funds from easy credit into Real Estate had run its course. Interest rates were rising in response to the poor creditworthiness of mortgagees. All that was required to precipitate a credit crunch was a prick of the Nations confidence. Iran knew this and was all too willing to oblige.
If the reader is thinking that it was easy to see the writing on the wall they would be mistaken. Most market analysts of the time were outright bullish. Some, even though bearish, believed a fall in prices would be arrested by a Federal Reserve flooding the market with yet more money. What they didn’t realize was that in the ensuing panic and loss of confidence NOBODY was willing to borrow, lend or spend any more than was absolutely necessary.
There were a few voices shouting warnings of the impending deflationary collapse. They were all but ignored by the masses and even fewer followed their calls to invest in 2 year Gold Stock Warrants and Out of the Money S&P 2 year Put options.
History will unemotionally record this as the first Historic Crash of the new millennium. Many books will be written on the subject and will conclude that mankind got caught up (yet again) in an incredulous exercise of self-delusion and belief in a paper system backed by empty promises.
Our generation, deeply scarred and screaming for justice will no doubt impress utmost fiscal discipline on our young. Hopefully they will have the fortitude to avoid repeating our mistakes…
More commentary and stock picks follow for subscribers…
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Greg Silberman CA(SA), CFA
goldandoil@yahoo.com
I am an investor and newsletter writer specializing in Junior Mining and Energy Stocks.
Please visit my website for more free articles and analysis
Click here: http://goldandoil.blogspot.com/
This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
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-- Posted Friday, 14 July 2006 | Digg This Article
