Big Oil’s Dangerous Game

December 20, 2012

  • Tensions get heavy in the Middle East… and Big Oil is fanning the flames…
  • The apocalypse is nigh… Byron King offers reassuring news and survival tips…
  • Patrick Cox’s black swan event… cracking a brittle politicized system to pieces…
  • The Bank of Japan stomps on the monetary gas… Japanese investors turn to gold… a Russian doomsday cabaret… and more!

  “The prime minister has been clear: If Exxon lays a finger on this territory, they will face the Iraqi army,” says Sami al-Askari, a parliament member and right-hand man of Iraqi Prime Minister Nouri al-Maliki.

Whoops… Looks as if Big Oil has stepped into it. “It” in this case being the centuries-old ethnic divides of the Middle East.

Since the eruption of a Arab-Kurdish-Turkish shootout over an unpaid gas bill last month in a town called Tuz Khurmatu, tension between the rival factions has been thick. So thick, the somewhat self-governing Kurds are warning that a civil war over disputed territories like Tuz Khurmatu could be near.

  “One day,” we vividly recall Byron King telling us a couple of weeks ago, “we’re going to wake up and there’s going to be a new country called Kurdistan” — with all sorts of portents for the price of oil.

By some accounts, the Kurds make up the largest ethnic group in the world that doesn’t have a nation-state to call its own. They live in parts of Iraq, Turkey, Syria and Iran.

In one sense, you can’t blame XOM for trying to cut a deal with the Iraqi Kurds — who have a degree of self-government in post-Saddam Iraq. In 2009, when the central government in Baghdad installed by the U.S. handed out the oil goodies, American firms were largely shut out; Exxon Mobil got a booby prize in the West Qurna field, but it was so unattractive the company gave up on it two months ago.

Which brings us to the saber rattling this week: According to Baghdad’s Deputy Prime Minister Hussain al-Shahristani, if Exxon elects to operate in disputed territories, “they would be committing a grave mistake.”

Sentiments echoed by a Baghdad military officer who claims the Iraqi army will open fire under three scenarios: if the Kurds fire first or advance their positions, or if oil companies begin pumping in the disputed territories.

  “We opened fire at an Iraqi military helicopter flying over our forces,” Anwar Othman, deputy minister for Kurdish military affairs told Reuters. “This is a clear message that next time, our response will be tougher.”


To shake up the hornet’s nest even further, “News of the clash came,” Reuters reports, “just hours after authorities announced Iraq’s President Jalal Talabani, a Kurd, had been hospitalized following a stroke that had left him in critical, but stable condition.”

  Meanwhile, with the apocalypse only a day away, the aforementioned Mr. King offers some reassuring news…

“There’s no true issue here,” said David Morrison, an astronomer at the NASA Ames Research Center near San Francisco. “This is just a manufactured fantasy,” he added, encouragingly. Seems NASA’s been flooded with up to 300 phone calls and emails per day from folks who worry the “fiscal cliff” and tensions in Kurdistan will be rendered moot come tomorrow.

“A few weeks ago,” Byron writes, “Dr. Morrison held a press conference in which he discussed the so-called ‘Mayan apocalypse’ scenario. The NASA scientist went head-on to tackle the idea that the world is supposed to end on Dec. 21, 2012, after a sweet run of 5,125 years.

“According to Mayan apocalypse promoters, that date marks a ‘galactic alignment.’ That is, the elliptic plane of our solar system — the imaginary plane on which all of the planets of our solar system line up, relative to the sun — will conform to a similar plane across the Milky Way galaxy.”

  “The idea is,” explains Byron, “that the solar-galactic alignment could trigger a massive gravitational wave that distorts Earth’s rotation and causes untold levels of cataclysm across the planet. It sounds pretty cool, in a Star Trek sort of way. But according to Dr. Morrison, nothing like the proposed Mayan apocalypse will happen.

“One basic problem with the idea, per Dr. Morrison, is that there’s no true galactic ‘equator.’ The stars all move around too much. And even if there were such a thing, it would be an entirely arbitrary plane incapable of being precisely drawn, because it’s impossible to determine the Milky Way’s exact boundaries.

“This sort of dovetails with the archaeological point that the Mayans never even remotely had the science or technology to map the Milky Way, let alone define a galactic equator.

“All of which means that the greatest threat to our planet, well into the future, comes from mankind itself.

“That being said, I wish I could say ‘Happy New Year’ concerning 2013 and mean it. But as I look ahead, I’m worried about all sorts of looming man-made problems: the fiscal cliff, government spending and the seemingly permanent political gridlock in D.C., to name a few.”

100  Oh, yeah — that stuff. What’s an investor to do?

“What’s the best approach?” Byron asks. “What should one do? Especially if you don’t have a bunker in which to hunker? And you can’t quite afford to sit back and let it burn?

“Well,” he goes on, “defend yourself by owning ‘real’ things, and diversify.”

100  “First, keep a stash of cash — that is, have some dry gunpowder for when opportunity comes along.

“Then, own physical precious metals — gold and silver, as well as platinum, if you can get some.

“And keep all your ‘copper’ pennies minted before 1982, during which year they became mostly zinc pennies.

“Finally, own shares in promising mining, precious metal and energy plays.

“And here are five plays that I believe won’t just dodge the Mayan apocalypse of 2012, but also have excellent prospects as 2013 unfolds.”

[Ed. Note: Out of respect for Byron’s readers, we can’t give up his five favorite plays for 2013… but if you’re interested, you can get all of his recommendations here.]

  “This is a black swan event that will force changes that almost nobody is ready for,” proclaims our chief tech savant Patrick Cox.

Patrick swings in with some last-minute words on the “nutraceutical” story before it’s pulled off the Web forever tonight at midnight. If you missed us yesterday, Patrick expounded on the latest thyroid trials at Johns Hopkins University. And in light of the thousands of testimonials from people who’ve already been taking it for years, he predicts they’ll come out a resounding success.

“We have a degree of certainty,” Patrick explains, “based on simple detective work that other analysts don’t seem to employ, that the results of this study will be significant.”

  “The big picture, however,” Patrick goes on, “is not that I expect this study to confirm that the nutraceutical will be the first effective therapy for the treatment/reversal of Hashimoto’s thyroid disease in history, which would signify blockbuster efficacy for that indication alone.

“Rather, it must be considered in light of the other things we know about it.

“Specifically, we know it dramatically reduces inflammation in adult diabetics due to the Flint, Mich., study. That study, in turn, bolstered massive animal and cell studies that show effectiveness in, among other disorders, Alzheimer’s disease. Together, they point to one of the biggest breakthroughs in medical history.”

  “I realize, by the way,” Patrick concedes, “that sounds like more of the same hype that is generated on an industrial scale by the financial pubs business. It’s not.

“I’ve said from the beginning that this product will extend health spans so much that our entire social services structure, a brittle politicized system, cannot possibly adjust. Therefore, it will crack and be replaced. The big macro picture is that there aren’t enough young people to support longer boomer retirements even in good times — and these aren’t good times.

“The significance of the Hopkins study is, therefore, twofold. One, it is further indication that this phytochemical is an unexpected and massively effective treatment for endemic innate autoimmune disorder. Two, it is from one of the most important endocrinological authorities in the world and will, therefore, force many scientists and physicians to take, for the first time, this technology seriously.”

If you haven’t yet, today is your last chance to take advantage of this rare opportunity before it shuts down tonight at midnight.

  Stocks are flat this morning after a late-day loss yesterday attributed to — you guessed it — “fiscal cliff” worries.

Funny how the Dow is up 700 points since Nov. 15 and the cliff’s been looming the whole time. Just sayin’… At last check, the Dow sits at 13,250.

Overnight, the Bank of Japan stepped on the monetary gas, spurred by the back-seat driving of the new prime minister, Shinzo Abe. This morning, IntercontinentalExchange announced it was buying NYSE Euronext, the parent company of the New York Stock Exchange, for $8.2 billion. There’s also a flurry of numbers traders are weighing…

  • First-time unemployment claims: Not all the post-Sandy noise is gone from this number; it jumped 17,000 last week, to 361,000
  • Third-quarter GDP: The Commerce Department’s third and final guess rings in at an annualized 3.1% — quite the change from the initial estimate of 2.0%
  • Existing home sales: up 5.9% last month, says the National Association of Realtors
  • Mid-Atlantic manufacturing: expanding again, says the Philly Fed survey. Noteworthy in that it’s only the third positive reading since April
  • Leading economic indicators: Down 0.2%, according to the Conference Board. The big driver was unemployment claims — which, as we’ve noted, have been exceedingly noisy of late.

Gold has sunk another 1% as of this writing, to $1,650. Silver is in danger of breaking below $30. None of the metals beat down in the last week can be chalked up to dollar weakness; the dollar index has plunged during that time from 80 to — at last check — 79.1.

  Japan jumps on the gold wagon…

Possibly in response to the newly elected Shinzo Abe’s commitment to taking the torch for the world’s new QE pioneer, the Japanese public are slowly turning to gold.

Breaking a longtime tradition, Japanese pension funds are paring back their heavy holdings of stocks and bonds to invest in gold and other physical assets.

“The global pension market is of a huge scale,” Market Oracle reports, “with the Japanese pension market alone worth some $3.4 trillion.

“Even a small allocation by pension funds internationally to gold would result in a significant new source of demand, which could be a new fundamental factor that propels prices higher in the coming years.”

[Ed. note: Below, Platinum-level Members of the Agora Financial Reserve can learn in-depth how the latest wrinkle in Japan’s monetary madness will drive gold… along with specific ideas on how to play the trend. It’s part of The 5 Min. Forecast PRO — our new “sixth minute” that delivers specific, actionable advice drawn from insights here in The 5.

While it’s still in the beta-test stage, the PRO edition will be available only to Platinum-level Reserve Members. If you’re not yet a Member, call John Wilkinson at 866-361-7662 and he’ll be happy to review the credits on your account.]

  This sounds like a lot more fun than the “Apocalypse Balls” in China: As many as 300 Russians will pay $1,000 each to ring in the end-of-whatever on Friday… inside a bunker built in 1956 to save Soviet leaders from nuclear attack.

Bunker No. 42, as it’s known, lies 184 feet underground in central Moscow. Part of it was converted to a museum in 2006… and this year, a section was turned into a nightclub.

Doomsday venue in progress: It’s got a good beat, and you can dance to it…“Upon entering the bunker,” Reuters reports, “visitors will be whisked 18 floors down in an elevator to a warren of rooms where loudspeakers blast out the old Cold War warning: ‘Attention! Attention! The enemy has carried out a nuclear attack!'”

“There’ll be a children’s room with cartoons. For adults, there’ll be movies, talks dedicated to the end of the world and tours of the museum,” says tour guide Alexei Pavlovsky. “There’ll be live broadcasts from other bunkers in other countries.”

We’ll assume the bunker is equipped to keep the lights flashing and the music thumping after the Earth’s axis goes all haywire tomorrow…

  “Please advise the half-wits operating as your ‘acquaintances in D.C.’s foreign-policy circles at the Empire Salon’ that their knowledge of ‘automatic weapons’ rivals mine regarding nuclear cold fusion,” writes a reader torqued off by Tuesday’s episode.

“None of the handguns they depict is automatic, nor are the preponderance of the long guns. Of the few which are available in ‘full-auto’ versions, none are ‘legal.’ Indeed, they were placed under extreme control by the National Firearms Act of 1934. (That’s 78 years ago, for those who were educated in government schools.) One can only imagine that the news travels slowly to the D.C. elites.”

  “Whose definition are you using?” a reader inquires after we noted that “waste, fraud and abuse” in the federal budget amounts to $87 billion a year, or 2.35% of the total federal budget.

The answer is the Council of the Inspectors General on Integrity and Efficiency — an organization of federal government watchdogs.

The council has 12,600 members… which says more about government bloat than it does about waste.

For what it’s worth, this editor recalls reading that when Jefferson became president in 1801, he was outraged to learn the War Department had swelled to 13 civilian employees under Adams.

Extrapolating for population growth, that would be a little over 1,000 people today. The actual number employed by the modern-day Defense Department is 801,000… plus 776,000 contractors.

  “I like the more in-depth addition to The 5,” a Reserve Member writes after examining our 5 Min. Forecast PRO this week. “Like having dessert and then the main course.”

The 5: It’s a work in progress, but we like the progress we’re making.

While we continue to tweak this new service, we’re making it available exclusively to Platinum-level Members of the Agora Financial Reserve. But watch this space for an announcement soon when we open it up to our entire readership!


Dave Gonigam
The 5 Min. Forecast

P.S. Last chance: Access to Patrick Cox’s Breakthrough Technology Alert at 60% off — including his pathbreaking research on the tobacco-derived product that could extend the human life span and make early investors very wealthy — expires tonight at midnight.


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