Saturday, January 29, 2011

Middle East instability good for commodities

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The West has long championed democracy. They want it for the West, and they want it for the Arab world. Careful what you wish for. The reality is that the Arab world is not ready for any form of moral political regime which will serve them. Anything they hatch will be a coercive system. There is the very real threat that any revolution in the Middle East will simply turn into a civil war, from which a jihad will be pursued by some populist with shallow ideals.
More importantly for the West....what about the oil? If there is any hint at all that further Arab nations are going to fall prey to revolution, then we are going to see gold and oil prices skyrocket. The US will be in the very awkward position of no longer being able to prop up a dictator, and also in the position of defeating a 'democratic shift' for these countries. Might it even resort to propping up the existing regimes?
The other possibility is that the US and Britain seek to protect their Middle East oil interests. We must remember that the US and British oil interests in the region were nationalised in the 1960s. Might they decide to belatedly seize them back, whether for their own sakes, or to act as a form of trustee for foreign and Arab interests, i.e. Savings scheme for Arabs.
These are very interesting times, and the prospects for political instability has escalated considerably... so this is a critical time to hold commodities such as gold and oil stocks. There are a number of reasons in fact:
1. Regional war in the Middle East - on many fronts as Iran is very unstable as well
2. North Korean threat - probably less of a concern
3. Financing issues for the West - there always seems to be trauma when the West has a financial crisis. Might the US monetary policy be causing 'cost-of-living' inflation problems for Egyptians?
Andrew Sheldon

ConvinceMe.Net - Anyone up for a debate?