Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Capital Leaving Middle East Looking For Safe Havens In Hard Assets and Crude Oil

Stock-Markets / Financial Markets 2011 Feb 03, 2011 - 02:54 AM GMT

By: Jeb_Handwerger

Stock-Markets

Last week I warned of a flare-up in Egypt and a reversal in oil and gold. The media are transmitting pictures of street scenes in Egypt that for the most part appear benign. However, riptides of anti-Americanism are squirreling ominously beneath the surface. There are reports that El Baredei is to form a unity government with the Muslim Brotherhood. Business leaders, Westerners, and major shipping companies have rerouted their ships away from Egypt. Egypt has been an ally of the United States for more than 30 years but the new leadership may move the country more extreme. President Hosni Mubarek has been "America's Man" at the cost of over a billion dollars a year. During Mubarek's rule Egypt has been at peace with Israel and the US, yet there is now growing anti-Western sentiment. It is a complex situation loaded with large "Black Swans."


The main point for investors is this change is causing a major flow out of Middle Eastern equities and paper -- such as Egypt Index ETF (EGPT), Market Vectors Gulf States Index ETF (MES), WisdomTree Middle East Dividend Fund (GULF), Israeli Stock ETF (EIS), and SPDR S&P Emerging Middle East & Africa (GAF) -- into gold (CEF), oil (OIL) and commodities (DBC). I expect this trend to continue and for investors to hedge for an eventual changing of the guards. As evidenced in Lebanon and Gaza, the anti-Western sentiment is gaining popularity and we may see several years of geopolitical tensions throughout the Middle East. It doesn't appear that investors like this change of the guard and we may see a more militant Middle East. Investors are fleeing Middle Eastern paper for hard assets as major geopolitical concerns increase. As the situation in Egypt progresses consider the following factors in play:

1. "The Domino Scenario" Initially Lebanon and Tunisia succumbed, now Egypt is in crisis, and Yemen, Algeria, and Libya are on the brink; eyes are now on Jordan, one of our major allies in the Middle East, where unemployment and hunger are rife within a hostile Palestinian population. They still mourn the night of September 16, 1970, known as "Black September," when 25,000 Palestinians were massacred by the troops of King Hussein. This was in retaliation for the Palestinians' assassination of Hussein's grandfather while he was in prayer at the Dome of the Rock. Already King Abdullah is acquiescing to the masses by changing the cabinet. Could there be pressure in Saudi Arabia as well? This could potentially give key naval chokeholds to radical groups. Remember Mubarek was the strongest proponent of Modern Islam in the Middle East. For years they have been rewarded for maintaining peace with billions of dollars of aid and a strong military.

2. Can the Egyptian Crisis Be Contained? Or are we witnessing a pivotal turning point in history? The answer remains to be seen. Thus far the United States has been able to control such emergencies. However, America doesn't have a healthy financial structure at home. Our states and municipalities are failing. Unemployment is still high. In addition, the US is involved in two foreign wars. How much more spending both domestic and foreign can the US take with record deficits? The US has plenty of global enemies who are fully aware of our weakened condition. The Obama Administration has not supported Mubarek and this may signal to other countries that the U.S. isn't interested in further entanglement. This a warning to Israel, that they must look for new allies as the U.S. is not able to enmesh themselves into further conflicts.

3. Only One Nation, Iran, Comes Out of This With a Win/Win. Mysteriously, the country has been silent in the present crisis. One wonders if it stealthily continues to build its nuclear program. Iran is an old hand at using diversionary geo-political tactics to mask their true intentions. With all these revolutions taking place who cares about Iran? One question why has ElBaradei been chosen as the opposition leader? Is it because Mubarek has been the most vocal in the Middle East about controlling Iran's nuclear capabilities?

4. Could the Suez Canal Be Shut Down? If the Suez Canal closes, expect oil to gap higher. Remember 8% of all sea traffic goes through this intersection. Shipping costs could significantly increase along with Brent crude oil hitting above $100 a barrel. Shipping stocks' volume has increased as analysts monitor this sector. Before the 30-year peace agreement with Israel the Suez Canal was shut down for several years causing major increases. The Sumed Pipeline is another key asset which Egypt controls. The speculation of this strategic location to shut down or the lack of safety may be signaling companies are already rerouting carriers. Some of the key shipping stocks to watch are Overseas Shipholding (OSG) and Frontline (FRO). These stocks could see major gains if violence in the area increases.

Egyptian forces have cut off the use of cell phones and Internet from this region. Israel remains very tight-lipped about Sinai operations. The Israeli Stock ETF has gapped lower on this potential loss of an ally and trading partner. They are concerned about new enemy fronts being opened to the north in Lebanon, now controlled by Hezbollah and Syria, to the east by Jordan, which is dangerously close to becoming politically unstable, and now the potential of the Muslim Brotherhood in Egypt to the south. Israel is disappointed with Washington's lack of support of one of the few allies in the Middle East which stood up against Iran.

Important decisions over the next few weeks should move the Middle Eastern markets and could have a significant effect on precious metals, oil, and stock markets. Already there are reports of a lot of physical demand for silver and gold. Once the speculative positions are shaken out gold, silver, uranium and rare earths should continue their moves higher.

Fasten your seat belts for the volatile rides ahead.

Grab your free 30 day trial to my premium service at http://goldstocktrades.com/premium-service-trial

By Jeb Handwerger

http://goldstocktrades.com

© 2011 Copyright Jeb Handwerger- All Rights Reserved
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.


© 2005-2019 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