Photo Courtesy of Bloomberg

Our Berkeley-based colleague Larry Amernick offers a timely perspective on the conflict in his latest newsletter, a biweekly with a global point of view that is geared toward traders and investors. (Click here for a free sample.) Because the picture we get from Larry is quite different from the one the major news outlets are describing, we will quote him at length:

"The major media outlets have so far ignored this vital and important story. What triggered the violence was Hezbollah’s blatant attempt to create a ‘state within a state.’ Recently, Iran shipped and was attempting to install a modern communication and surveillance system for Hezbollah. The Lebanese central government saw this as a strategic threat to its sovereignty.

"For the last two days, gun and grenade fire could be heard all over Beirut. Both sides were trying to control the airport. Strategically, Iran is attempting nothing less than the takeover of a Mediterranean port. Hezbollah is a creation of Iran and takes its orders directly from Teheran. For its part, Syria has remained conspicuously silent during the conflict. In response, NATO has been moving sizable naval forces to the area and the U.S. just added the Abraham Lincoln carrier group to its forces in the Persian Gulf. Additional naval forces that could be headed to the region are currently involved in the Myanmar rescue operation.

"The wild card in this version of the ‘great game’ is Israel. Next week, the nation will celebrate its 60th birthday. President Bush, as well as many other heads of state, will be in attendance. At the same time, Palestinian groups in Lebanon have threatened to send over 100,000 people to tear down the Israeli-Lebanese border so they ‘may return to their former homes.’

"Hezbollah may provoke an Israeli reaction by firing over the border during this staged event. At the same time, Hamas may send thousands of its supporters to attempt to break through Israel’s southern borders. Again, Iran is the mastermind of this scenario. While attention is focused on Israel, Iran will use the turmoil to consolidate its hold on Lebanon. Control of the Eastern Mediterranean is Iran’s goal and the recent sharp increase in the price of oil is the reaction to this brewing crisis. The outbreak of war in Lebanon has also contributed to a rally in Gold, which is a barometer of fear."

For our part, we’ve been predicting that the price of oil will reach a potentially important high near $131 (basis the June futures contract. The Amernick Letter expects a top at 129.66 followed by a correction to 105.50.) However, if the shooting match in Lebanon continues to escalate, we would not be surprised to see quotes for oil and gold climb above these targets. Please note that our minimum projection for the latter – again, basis the June contract – is 902.50.

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com

-- Posted Sunday, 11 May 2008 | Digg This Article