Almost a year ago, I said we should be afraid – and prepared – for war.
A few of my readers said that I was a fear monger; that I was using scare tactics to influence my readers.
But here we are almost a year later and war is exactly what is happening.
While citizens on this side of the world are cheering for a recovery fueled by cheap credit (that eventually has to be paid back with higher interest rates), much of the world is in chaos.
Emerging markets are now feeling the pain of inflation, while developed countries reap the temporary rewards of the printing press.
This is what I wrote last year on September 23, 2012:
I am about to share with you a timeline of events that will not only shock you, but also give you a whole new perspective of the world’s financial system.
For years I have been writing about our economic decay and the growing financial war. The threats I mention are real. The facts are real. And the dangers are real.
Triggers are waiting to be pulled. You’re seeing it all over the news:
- Coordinated attacks against Western embassies in the Middle East.
- The assassination of a U.S. Ambassador at the hands of an anti-American terrorist in the Libyan US Embassy.
- Iran and Iraq on the brink of war, with cruisers, aircraft carriers and minesweepers from 25 nations converging on the Strait of Hormuz in defense.
- Iran makes a serious threat of World War Three
You’re seeing this all over the news, but can you connect the dots?
Connecting the Dots
The United States has just announced an open-ended QE3; printing billions of dollars every month as they see fit. This reckless money creation, a weapon by the US to balance trade deficits, is causing havoc worldwide.
(If you missed the last few issues (from 2012) of the Equedia Letter, GO HERE to catch up – it is very important you understand what’s at stake.)
Countries around the world are feeling the effects of this currency war. It’s created higher food prices in Egypt and stock bubbles in Brazil. Printing by the Fed leads to higher unemployment in developing economies as their exports become more expensive to Americans. While higher food prices means a lower standard of living for first world nations, it’s a matter of survival (see America’s Gold Wiped Out.) for smaller developing nations.
As a result of the currency war and the reckless abandonment of sound fiscal policy by the United States, countries around the world are beginning to leave the dollar in droves. The capital markets are now hanging sitting on the edge of a major fiscal cliff.
Imagine what would happen to our markets if the Russians decided to launch a resources assault (they control the world’s biggest gas company, producing 17% of the world’s gas), the Chinese retaliates and launches a currency assault, and Iran triggers World War III.
Can our capital markets withstand a culmination of these events?
The threats are extremely real. I urge you to read everything below and judge for yourself. Open your eyes.
A Shocking Timeline of Events
- January 1, 2006: Russia cuts off all gas supplies passing through Ukrainian territory
- October 28, 2008: RIA Novosti reports Russian Prime Minister Vladimir Putin proposed that Russia and China should gradually switch over to national currency payments in bilateral trade.
- November 15, 2008: Reuters reports that Iran has converted financial reserves into gold to avoid future problems.
- November 19, 2008: Guangzhou Daily reported that China’s central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country’s huge foreign exchange reserves of dollars.
- March 23, 2009: People’s Bank of China reported that Zhou Xiaochuan, Governor of the People’s Bank of China calls for the establishment of a new international reserve currency to replace the dollar.
- March 30, 2009: Agence France Presse (AFP) reports that Russia and China are coordinating proposals on a new global currency that could replace the US dollar as a reserve currency to prevent a repeat of the global economic crisis
- March 31, 2009: The Financial Times (FT) reports that China, which is pushing to end the dominance of the dollar as a worldwide reserve, has agreed a currency swap with Argentina that will allow it to receive renminbi instead of dollars for its exports to the Latin American country.
- April 26, 2009: AFP reports that China is calling for the reform of the world monetary system.
- June 16, 2009: Reuters reports that the BRIC nations of Brazil, Russia, India and China called for reform of international financial institutions, sweeping changes to the United Nations to give a bigger role to Brazil and India and a “stable and predictable” currency system.
- November 3, 2009: Bloomberg reports that India has purchased $6.7 billion worth of IMF gold to diversify out of the dollar, as ballooning U.S. debt and low interest rates weaken the currency.
- June 29, 2010: Reuters reports that a new United Nations report released calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value.
- November 7, 2010: World Bank president Robert Zoellick says that the G20 should consider a new financial system that considers employing gold as an international reference point of market expectations about inflation, deflation and future currency values.
- November 24, 2010: China Business Daily reports that China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade.
- December 15, 2010: Bloomberg reports that both China and Russia have called for the dollar’s role in global trade to be diminished since the global financial crisis, and Russia is promoting the ruble as a reserve and trading currency within the former Soviet Union. Moscow’s Micex exchange started trading the yuan against the ruble for the first time today, as Russia and China seek to reduce the use of dollars in trade.
- May 4, 2011: Financial Times reports that Mexico has quietly purchased nearly 100 tonnes of gold bullion, as central banks embark on their biggest bullion buying spree in 40 years.
- July 24, 2011: Financial Times reports that Iran and China are discussing using a barter system to exchange Iranian oil for Chinese goods and services, as U.S. sanctions have blocked China from paying at least $20 billion for oil.
- August 1, 2011: Reuters reports that South Korea’s central bank bought 25 tonnes of gold over the past two months in its first purchase in more than a decade, saying the time was ripe to boost its gold holding.
- August 17, 2011: Venezuelan President Hugo Chavez said that he plans to nationalize the gold sector. He’s also ordered the repatriation of 90 percent of Venezuela’s gold reserves held abroad, returning the country’s gold reserves back to Caracas.
- December 26, 2011: The Japanese government reports that Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges.
- December 28, 2011: India and Japan sign new $15bn currency swap agreement
- January 7, 2012: Iran and Russia replaces the U.S. dollar with their national currencies in bilateral trade.
- January 17, 2012: Reuters reports that the People’s Bank of China said China and the United Arab Emirates have signed a currency swap agreement.
- February 21, 2012: Bloomberg reports that the Turkish central bank said China and Turkey have signed a three-year currency swap agreement
- March 22, 2012: BBC reports that China and Australia have signed a currency swap agreement in a bid to promote bilateral trade and investment.
- March 30, 2012: Bloomberg reports that Iran and its leading oil buyers, China and India, are finding ways to skirt U.S. and European Union financial sanctions on the Islamic republic by agreeing to trade oil for local currencies and goods including wheat, soybean meal and consumer products. Iran also has sought to trade oil for wheat from Pakistan and Russia, according to media reports from the two countries.
- June 1, 2012: Asia Times reports that Japan and China have started direct trading of their currencies, the yen and the yuan, on the inter-bank foreign exchange markets in Tokyo and Shanghai in an apparent bid to strengthen bilateral trade and investment between the world’s second- and third-largest economies. It is the first time that China has allowed a major currency other than the dollar to directly trade with the yuan.
- June 7, 2012: Reuters reports that Kazakhstan’s central bank will increase the share of gold in its foreign exchange reserves.
- June 22, 2012: Financial Times reports that Brazil has provided a vote of confidence in China’s efforts to promote the renminbi as a reserve currency by becoming the biggest economy yet to agree a swap deal with Beijing.
- June 26, 2012: Xinhua reports that Chinese Premier Wen Jiabao and Chilean President Sebastian Pinera announced the establishment of China-Chile strategic partnership and the completion of negotiations on investment-related supplementary deals to a bilateral free trade agreement. Wen suggested that the two sides launch currency swaps and expand settlement in China’s renminbi. Wen then states that China is also ready to discuss and sign currency swap agreements with more ECLAC countries (Economic Commission for Latin America and the Caribbean).
- August 1, 2012: Bloomberg reports that The Bank of Korea, which has the world’s seventh-biggest foreign-exchange reserves, boosted gold holdings for the third time since June last year, joining central banks from Russia to Kazakhstan in buying bullion to diversify assets.
- September 4, 2012: The European Commission launches an anti-trust case against Gazprom, opening the formal legal probe based on “concerns that Gazprom may be abusing its dominant market position in upstream gas supply markets.”
- September 21, 2012: Reuters reports that Brazil threatened a further clampdown on speculative foreign capital, firing a warning shot in a “currency war” its finance minister blamed on money-printing by Western central banks. Finance Minister Guido Mantega said Brazil would not allow its currency, the real, to strengthen as a result of aggressive monetary stimulus by the United States and other developed nations.
- September 23, 2012: Tehran’s military officials continue to threaten Israel with annihilation should it strike nuclear facilities; Senior commander of Islamic Revolutionary Guard Corps says Iran will not start war, but “warn that US involvement in conflict will trigger WW3.”
The threats and events mentioned above are not simply extreme worst-case scenarios, but a maelstrom of events happening all over the world. I give you strong examples that China, Russia, Brazil, and other nations are seeking alternatives to the dollar as a world reserve currency.
As I mentioned in America’s Gold Wiped Out, a “currency war” is a fight between countries to achieve a lower exchange rate for their own currency. In other words, its competitive devaluation. In short, the cheaper your currency, the more money you attract from foreign entities; this leads to increased exports, growth, and job creation. But never has printing during a global slowdown resulted in any growth or job creation.
I go onto say:
“I know a lot of really smart guys telling everyone to stay out of the markets – they have been for the last year. Yet, the market continues to climb. My prediction remains: The markets will continue to climb, even if it’s with volatility. I said it earlier this year in, “A Shocking 2011 Cover-Up.“
…We’re also less than 2 months away from the US elections. I have a strong feeling Obama will stay in power; if the market continues to rise for the next few months leading up to the election, he will.”
It’s now a year later and the market has continued to climb since that letter and Obama is still president.
I am not revisiting that letter to tell you that my predictions came true; I am revisiting it for one very specific reason: The threat of war.
The War the Government Doesn’t Want Exposed
Take a look at the underlined bullet points above and you will see an astoundingly shocking chain of intertwined events all related to currency and energy.
Currency manipulation allows developed countries to print and lend to other developing countries at will.
A rich nation might go into a developing nation and lend them millions of dollars to build bridges, schools, housing, and expand their military efforts. The rich nation convinces the developing nation that by borrowing money, their nation will grow and prosper.
However, these deals are often negotiated at a very specific and hefty cost; the lending nation might demand resources or military and political access. Of course, developing nations often take the loans, but never really have the chance to pay it back.
When the developing nations realize they can’t pay back the loans, they’re at the mercy of the lending nations.
The trick here is that the lending nations can print as much money as they want, and in turn, control the resources of developing nations. In other words, the loans come at a hefty cost to the borrower, but at no cost to the lender.
That is why energy is much more valuable than currency in a fiat system. That’s why many wars have been fought over the control of energy.
The current conflict in Syria is no different.
Let me rephrase that so I don’t get into trouble: Yes, there is a serious civil conflict in Syria that is not about energy.
But Russian and American involvement in Syria is…
The Syrian Conflict
Russia, as you can see in the above timeline of underlined points, has been strategically positioning itself with energy rich nations – making allies by supplying arms and infusing cash to nations who can’t refuse.
For example, Bangladesh.
Via my uranium report:
“Earlier this year, Russia signed the long awaited nuclear power agreement, financing $500M for the supply of two 1000 Megawatt reactors with Bangladesh.
The deal was immediately followed days later by a major arms purchase agreement worth a billion dollars for the delivery of armored vehicles and infantry weapons, air defense systems and Mi-17 transport helicopters.”
Russia is already the dominant energy powerhouse in Europe, supplying and controlling nearly 40% of total gas imports to Europe.
Russia’s energy dominance in the Eastern Hemisphere has allowed the nation to amass fortunes; fortunes used to continue its energy dominance through resource acquisitions and the buying of support from resource-rich allies.
Russia wants this dominance to continue.
That’s why it needs to maintain control over Syria.
Syria: The Perfect Target
Syria is bordered by Turkey to its north, Lebanon to the west, Israel to the southwest, Jordan to the south, and Iraq to the east.
Syria’s location puts it smack in the middle of Qatar and Turkey; a perfect crossroads for a natural gas pipeline that could make Qatar, the world’s largest exporter of liquid natural gas (LNG), a strong supplier of gas to Europe.
A gas pipeline from Qatar to Turkey means will Russia lose its dominance and control over energy supplied to Europe; thus Russia will lose lots of money and power.
Of course, Qatar interests want to supply Europe with gas because it will make them a lot of money.
That’s where the Nabucco-West pipeline comes in…
The Nabucco-West pipeline is a proposed natural gas pipeline from the Turkish-Bulgarian border to Austria. It is a modification of the original Nabucco Pipeline project, which was to run from Erzurum in Turkey to Baumgarten an der March in Austria.
The aim of the Nabucco pipeline is to diversify the natural gas suppliers and delivery routes for Europe; thus reducing European dependence on Russian energy.
The original project was backed by several European Union member states and by none other than the United States.
However, Nabucco’s future is far from assured, because its proponents have yet to reach agreements with gas suppliers. While there are other options, the most logical and economic solution would be a pipeline from the Middle East to Turkey, with gas supplied by Qatar.
And herein lies the conundrum…
In order for Qatar gas to reach Turkey, it has two options*:
One option would lead a pipeline from Qatar through Saudi Arabia, Kuwait and Iraq to Turkey.
The other would go through Saudi Arabia, Jordan, Syria and then to Turkey.
Saudi Arabia already said no to the first route because it wants to ensure that it gets a piece of the action and maintain control over the gas that goes through its region.
Of course, that means less profits and control for Qatar.
So that means option one won’t happen. Onto Syria.
*If you look at the map, you may be wondering why Qatar can’t go through Iran (not to be confused with Iraq). That’s because Iran and Qatar share the South Pars / North Dome field – the world’s largest gas field. In other words, Iran doesn’t need Qatar. As a matter of fact, if the proposed Iran-Iraq-Syria pipeline goes through, it would deal a major blow to Qatar.
Syria’s President Bashar Hafez al-Assad has long been Russian President Vladimir Putin’s ally.
At the recent G20 summit this week, the media was shocked to hear Putin’s direct remarks regarding helping the Assad regime in Syria:
“Will we help Syria? Yes, we will. We’re doing it right now, we’re supplying arms.” – Vladimir Putin
Why everyone was so shocked to hear that is beyond me.
Russia has been helping Syria by supplying arms, fighter jets, tank parts, advanced anti-ship cruise missiles, long-range air defense missiles, military officers as advisers, diplomatic cover, and a boat load of cash, since the Syrian conflict began more than 2 years ago.
It’s no wonder why Assad said no to the second route; he’s obligated to help block the flow of natural gas out of the Persian Gulf into Europe to ensure that Russia remains in control of European energy.
It’s no wonder why Qatar has spent more than $3 billion supporting the rebels in dethroning Assad.
If Assad is forced out, Qatar could put in place a puppet regime in Syria that will allow them to build a pipeline into Europe and give Qatar the ability to sell natural gas to Europe, undermining Russia.
Of course, the Saudis have also been helping the rebels because it too wants to control the flow of energy from the Persian Gulf to Europe.
There are even rumours that Saudi Arabia and Qatar may be ‘bribing’ US congressmen to approve war on Syria in order to dethrone Assad.
“American historian Webster Griffin Tarpley says that Saudi Arabia and Qatar are offering bribes to the US congressmen for a military strike against Syria.
“The Saudis and the Qataris are reported to be deploying huge amounts of money for bribery, bribery to the families and political and business interests of these members of congress,” Tarpley said in an interview with Press TV on Friday.
“Hillary Clinton has received 500,000 dollars in jewelry from the king of Saudi Arabia and Hillary Clinton just came out for war,” he added.”
If Qatar or Saudi Arabia gains control of Syria, it would be a major blow to Russia.
The U.S. wants to supply Europe with gas; this was made clear when it backed the Nabucco-West pipeline.
America reaffirmed its natural gas stance last year with Exxon and Qatar proposing a $10 billion U.S. energy export project.
The U.S. has the world’s largest supply of natural gas and it has boldly made plans to profit from supplying gas to Europe.
Combine that with the fact that Washington and Iran are direct enemies, and you can see why it is in America’s best interest to dethrone Assad.
Dethroning Assad will kill two birds with one stone; it will bypass Iran and loosen the control Russian energy has over Europe.
All of this means that the U.S. and its energy allies, Qatar and Saudi Arabia, will do whatever they can to remove Assad and implement their pipeline wishes.
Russia, on the other hand, wants Assad to stay in power so that a new pipeline from the Middle East to Turkey will not undermine Russia’s profits.
To read more details on this, a great article was published in the Guardian this week. Also, to get a better scope of the whole pipeline war, Aljazeera published a great article last year. You can find it by clicking here.
I suggest reading both articles thoroughly.
Do you think the war in Syria is about Energy?
What to Expect
If U.S. strikes Syria, the conflict could blow up into a full-scale war very quickly, likely with American soldiers on Syrian soil – despite promises that there will be no American boots on the ground in Syria.
After all, military air strikes alone can’t win wars.
No one can be certain of the outcome in Syria – which means no one can be sure of the outcome of oil and gas prices.
My investment philosophy has always been very simple: Focus on what we know, not what we don’t.
We don’t know what’s going to happen in Syria, which means we don’t know what’s going to happen to oil and gas prices.
But we do know one thing is for certain: By the end of this year, the HEU program is over.
Those of you who don’t know what the HEU program is, please read my report:
The end of the program means America will be buying much of its uranium at prices likely set by Russia.
Remember, more than 40% of U.S. uranium imports come from Russia, or from locations under the influence of Russia.
Go back to my letter, “An Explosive Opportunity” to understand more.
Given the conflict escalation in Syria between Russia and the U.S., do you think Russia is going to give leniency by supplying America with lower uranium prices one the HEU agreement is over at the end of this year?
That was a rhetorical question.
That is why I like the uranium space so much.
That is also why I like Uranerz Energy Corp. (TSX: URZ)(NYSE MKT: URZ).
Uranerz Energy is set to move into production around the same time the HEU contract is up.
Uranerz just announced it has closed a $10 million financing – which has put a temporary damper on its share price. But this was expected.
In my report, I mentioned that there would be financing and dilution risks, but once financing is in place and production starts, the risks of dilution may be removed:
“…I believe that production start and growth will significantly outweigh the risks of current dilution. As a result, the current overhang on Uranerz shares – which I believe is due to financial risk – may be removed.”
Uranerz still needs more money, but a $20 million loan under the State of Wyoming’s Industrial Development Revenue Bond program is expected to close over the next month or so; I believe this is the biggest reason for Uranerz’s current share price overhang, but it may also be a great catalyst if the loan closes.
Uranerz is now trading well-below both its 50 and 200-day moving average, and the RSI indicator is now at 32. 79. From a technical standpoint, it shows that Uranerz may not only be oversold but may be looking for a bounce back. However, given the recent $10 million bought deal financing, we may see some more pressure.
Mark my words: unless there is another Fukushima event, I expect uranium prices to soar in 2014.
I have purchased shares in Uranerz after my initial report, and I am not looking to sell anytime soon.
Until next time,
The Equedia Letter
I am biased towards Uranerz Energy Corporation because they are an advertiser, I own stock (purchased after the initial report) and I own options. You can do the math. Our reputation is built upon the companies we feature. That is why we invest in every company we feature in our Equedia Reports, including Uranerz Energy Corporation. It’s your money to invest and we don’t share in your profits or your losses, so please take responsibility for doing your own due diligence. Remember, past performance is not indicative of future performance. Just because many of the companies in our previous Equedia Reports have done well, doesn’t mean they all will. Furthermore, Uranerz Energy Corporation and its management have no control over our editorial content and any opinions expressed are those of our own. We’re not obligated to write a report on any of our advertisers and we’re not obligated to talk about them just because they advertise with us.
Disclaimer and Disclosure
Equedia Network Corporation is also a distributor (and not a publisher) of content supplied by third parties and Subscribers. Accordingly, Equedia Network Corporation has no more editorial control over such content than does a public library, bookstore, or newsstand. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by third parties, including information providers, Subscribers or any other user of the Equedia Network Corporation Network of Sites, are those of the respective author(s) or distributor(s) and not of Equedia Network Corporation. Neither Equedia Network Corporation nor any third-party provider of information guarantees the accuracy, completeness, or usefulness of any content, nor its merchantability or fitness for any particular purpose.