“A Milestone of Modern Warfare”

July 18, 2013

  • “A milestone of modern warfare”: Byron King spotlights an untold story from the Middle East in an international-intrigue episode of The 5…
  • “Billions of dollars flow through this secretive sector”: Profitable insights from the North Korean ship stopped at the Panama Canal
  • Unprecedented demand: What’s behind a silver sellout at FreedomFest
  • Trashing the RFID student-tracking chips in Texas: A response to public outrage… or is there a more cynical explanation?
  • A final word on the AMA… affirming words about IRS incompetence… a few more words about gold as a “survival” tool… and more!

  Imagine a huge explosion rips through your hometown… and nearly two weeks later, you still have no idea who’s to blame.

Latakia, Syria… Friday, July 5

On July 5, a military arsenal run by the Syrian government went kablooey in the port city of Latakia. Immediately, the outside world wrote it off as a lucky strike by the rebels trying to take down the government of President Bashar al-Assad.

Until the rebels said, “Nope, not us.”

A week later, The New York Times said it was an “air attack” by Israel, citing anonymous “American officials.” The target: sophisticated missiles supplied to Syria by Russia.

  You’d think somebody would have seen something coming before such an attack.

Apparently not, says Byron King to his Military-Tech Alert readers. “According to Russian reports, during the attack, neither Syrian shore-based radars, nor radars on Russian warships cruising offshore, detected aircraft or missiles heading for Latakia. That is, neither Syrian nor Russian forces detected anything unusual, and thus took no defensive measures.”

So what gives?

The explanation turned up in London’s Sunday Times: It was an “air attack” in the sense that something flew through the air before it blew up the arsenal. And that “something” was cruise missiles, launched from an Israeli submarine.

100  If true, “this is a milestone of modern warfare,” says Byron — let alone warfare in the Middle East.

“A submarine attack — by Israel or by any other navy in the world — re-emphasizes the importance of all manner of advanced warfare technologies that have drifted into the shadows since the end of the Cold War. In particular, it highlights anti-submarine warfare, as well as a variety of intelligence-gathering and electronic warfare technologies.”

Up to now, only two nations have attacked other nations with cruise missiles fired from submarines: the U.S. against Iraq in 1991, and the U.K. against Libya in 2011.

  “The target in Syria,” says Byron, “was a consignment of 50 Russian-made Yakhont P-800 anti-ship missiles that the Russian government delivered to President Assad’s armed forces earlier this year.”

Russian P-800 supersonic cruise missile. Photo credit: ruaviation

“According to open-source literature,” says Byron, “P-800 can be fired from shore batteries, aircraft or ships.” Its range: roughly 175 miles — “far exceeding its NATO counterparts.

“The presence of P-800 in Syria places much of Israel’s navy — as well as offshore production facilities for Israel’s new natural gas fields — in the threat crosshairs. It’s not difficult to understand why Israel may have determined to take out the P-800 missiles, although it’s truly audacious to use a submarine to conduct a ‘naval’ intervention in Syria’s civil war.”

  Whatever Israel’s motives, the July 5 attack is a game changer. “Israel,” says Byron, “has eliminated a class of Russian weaponry that is a deep concern to U.S. and NATO war planners.

“Somebody at NATO,” he says, “should consider sending a thank-you note to the Israeli general staff, because when deployed, the P-800 missile would clearly expand Syria’s ability to threaten ships in the eastern Mediterranean” — like U.S. and NATO ships supplying the Syrian rebels.

“Most importantly, perhaps, the Israelis have demonstrated the combat use of submerged, submarine-launched cruise missiles. If anyone was wondering, the time for doubt is over. Looking ahead, the next target could just as easily be, say, a nuclear facility and/or command and control site in Iran.”

  The investment angle, you wonder? Look for a renewed push by governments around the world to beef up their anti-submarine warfare (ASW) capabilities.

Only yesterday, Bloomberg reported that Australia plans to beef up its recent order of Poseidon P-8A “sub-killer” airplanes from Boeing. “While it had planned to acquire eight aircraft… the number of P-8s could now reach into double figures.”

Meanwhile, the U.S. Navy plans to acquire 117 P-8A Poseidons. As Byron informed us last May, ASW is a virtually sequester-proof line item in the Pentagon budget.

What’s more, he explained, “Poseidon is a collection of technologies. It’s a system of systems, in which there are innumerable suppliers, vendors and subtier component providers — all the way down to the mines and mills.” Byron is especially keen on one of the contractors, which he’s recommended to his Military-Tech Alert readers.

  “Oh, and about that North Korean ship,” says Byron, pivoting to this week’s headlines.

As you might have seen, the Panamanians stopped a containership headed from Cuba to North Korea via the Panama Canal. Hidden beneath 10,000 tonnes of sugar was a stash of radar and missile gear — strictly prohibido under United Nations sanctions against North Korea.

Hey, what’s in that container beneath all the sugar?

Officially, the story goes that Panamanian customs were suspicious about drugs. Usually, there’s more to the story than that… as Byron readily confirms.

“There’s no doubt that someone (guess who) tipped the Panamanians to stop and search,” he says. “How did we know?” He rattles off the following possibilities…

  • Human intel on the pier, watching the load?
  • Overhead imagery of same?
  • Electronic intercepts of Cuban signals, phone calls, etc.?
  • Intercepts of signals from the ship? (North Korean vessels get special attention…)
  • Electronic intercepts of signals in North Korea?
  • Human intel in North Korea?

“You see,” he says, “these mil-tech undertakings happen every day. Whether it’s electronic communication software, boots-on-the-ground intel or any form of new mind-blowing technology, billions of dollars flow through this secretive sector. What’s better, this info normally flies under the radar of most Main Street market watchers.”

And a lot on Wall Street, too. Byron, however, is uniquely positioned to ferret out those opportunities, having built up decades’ worth of contacts as a Navy pilot and military scholar.

[Ed. note: The opportunities are found within Byron’s premium advisory, Military-Tech Alert. At the moment, it is available only as a package deal with our other stock-picking services. Through next Sunday only, we’re making this package deal as attractive as possible. Check out this special offer right now.]

  The major U.S. stock indexes are roaring to record highs, for no obvious reason.

At last check, the S&P was at 1,691. Blue chips and small caps are showing equal strength, with the Dow and the Russell 2000 both up two-thirds of a percent.

In addition to a flurry of earnings reports, traders are chewing on a mixed bag of economic numbers:

  • First-time unemployment claims: This increasingly volatile number dropped 24,000 last week, to 334,000. The four-week average is nearly unchanged… and not encouraging
  • Mid-Atlantic manufacturing: The “Philly Fed” survey crushed expectations, turning in the strongest reading since March 2011. The jobs component of the survey showed growth for the first time in four months. Hmmm…
  • Leading economic indicators: Pancake-flat, says the Conference Board. Housing is a serious drag here, which will raise more jitters on top of a “surprise” drop in building permits yesterday.

 After still another half-hearted run at $1,300, gold is back to $1,285. Silver isn’t even trying to touch $20; as of this writing the bid was $19.48.

  “If the U.S. Mint could ramp up production levels of Silver Eagles,” says Michigan coin dealer Patrick Heller, “I’m confident it could set an annual sales record by the end of September.”

Mr. Heller was among a half-dozen dealers plying their wares last week at FreedomFest in Las Vegas. “As soon as we opened up our booth Wednesday afternoon, we were besieged with customers wanting to purchase Silver Eagles.

“Unlike past years, customers constantly asked if we would sell them our entire inventory… By Saturday morning, every dealer who had brought Silver Eagles to Freedom Fest had sold out.”

Heller chalks it up to low prices and record attendance at the event. “Still, the incessant requests to make quantity purchases were at levels we had never experienced at FreedomFest before.”

The Mint has been rationing supply to its dealer network all year; its three suppliers of blanks can’t keep up with demand. Through the end of June, Silver Eagle sales in 2013 totaled 25,043,500. The all-year record came in 2011 — just shy of 40 million.

[Ed. note: If you have Fox Business on your cable system, check out John Stossel’s show tonight. A panel discussion recorded last week at FreedomFest features the Laissez Faire Club’s Jeffrey Tucker along with Vancouver alum Steve Forbes. Airtime: 9:00 p.m. EDT.]

  May the “Mark of the Beast” rest in peace…

Andrea Hernandez, along with her classmates in the Northside Independent School District of San Antonio, will no longer be required to wear RFID badges.

We first mentioned the RFID tracking last October, when the badges began tactfully sliding from optional to what the school called “full implementation.”

In November, we covered Andrea Hernandez, a student at the school who refused to wear the badge, citing religious reasons. Her father, Steven Hernandez, protested in front of the school, claiming the badges were only the beginning of something far more ominous: the mark of the beast.

School officials, in response, wagged her away to another school in the district that wasn’t part of the project until she was willing to comply.

In January, things heated up when John Whitehead, Andrea’s attorney and president of the civil liberties nonprofit Rutherford Institute, took the case. Although Whitehead was confident the courts would rule in Hernandez’s favor, U.S. District Judge Orlando Garcia ordered Hernandez to wear the tag or go to another school.

  After all the fuss, now this: “After a full year of testing a radio frequency identification project at two of its campuses,” the Texas Public Radio article begins, “the Northside Independent School District has decided to discontinue its student locator pilot at John Jay High and Anson Jones Middle schools.”

“Certainly,” a Northside spokesman told TPR, “the court case, the negative publicity, the increased human resources that were assigned to this particular initiative, the feedback from parents, students and staff, all of that was taken into consideration.”

We suspect the “consideration” would’ve sounded a bit different if they weren’t in the red: The $270,000 project began as a method of upping their attendance rates to keep from losing state funding. A year later, they discovered the program increased attendance by 0.5%… generating only $136,000 in state reimbursement.

Even bureaucrats recognize the law of diminishing returns. Sometimes…

  “Thank you for responding to my question regarding your views on the AMA, a reader writes. “Your views are right on the money.

[Feeling head swelling a bit…]

“I felt it would be better if the explanation came from you, rather than some unknown reader. Obamacare is a response to the very high cost of health care, and I believe very few people in the U.S. are aware of the AMA’s role in those costs. Thanks again for putting that out there.”

The 5: We have zero confidence that Obamacare will lower costs.

As we mentioned a while back in Apogee Advisory, the bill’s primary architect was a former executive at the insurance giant WellPoint who then became senior counsel for Sen. Max Baucus (D-Mont.) and later went on to become the White House’s point person on the law’s implementation.

Her work then done, and the revolving door in Washington being what it is, she’s now a lobbyist for pharma giant Johnson & Johnson.

  “The retired CPA who wrote yesterday was spot on about IRS personnel,” writes one of our regulars.

“To tell the whole story, about seven years ago, they went on a hiring binge, hiring 1,600 brand-new accounting students, fresh out of college with heads full of theory and no hands-on experience. These 1,600 went to the IRS auditing training center in Atlanta and were then ‘turned loose.’

“That was the start of poor IRS relationships, which hit the news back then, and it has perpetuated itself to today’s headlines and picking on many nonprofits.

“Heaven help you if you’re audited. Appeals and a good tax accountant or attorney are the norm nowadays. It’s akin to the Obamacare debacle: Do I pay to fight this or just pay the taxes, fines and penalties?”

  “Huh?” writes another reader in response to the fellow on Monday who said tools and weapons are more valuable than gold in a “SHTF” scenario.

“In such a world, gold is the only money. Sure, if you have food or medicine or weapons or ammunition or relevant skills, and you can defend what you have, then you can barter what you have for what you need.

“But if you don’t, you can barter gold (and silver) for what you need. Gold and silver are the only fungible means of exchange likely to function as money in that situation. I can’t fathom how any thinking person can possibly fail to understand that.

“Keep up the great work. Despite all the bitching, you no doubt hear from the least-common-denominator readers, The 5 is both fresh and informative. And I don’t give a s*** if it takes me two minutes to read or 20.”

  “I hear the survivalist types,” writes another regular, “telling me how they have their hideout deep in the woods/mountains/never land, well stocked with guns and ammo. And if the ‘man’ wants them, his soldiers better come well armed.

“I hate to tell these fine folk that it ain’t the soldiers that they need to worry about — the survivalists won’t even hear the smart bomb dropped from a drone at 10,000-20,000 meters.”

  “When I worked overseas doing oil jobs,” writes our final correspondent, “I used to carry a few small quarter-ounce gold coins sewn into my clothing.

“In the late ’70s, we were working in Iran when the revolution exploded. We went from friend to foe in a few short days. With the help of a few friendly Iranians, we (one co-worker and I) were able to use my coins to bribe the Iranian guards manning checkpoints looking for Americans.

“Eventually, we were able to slip over the border into Iraq and make our way to Baghdad, and from there to home. Every guard knew what gold was and they were all willing to turn the other way for a small coin. There is no way they would take the U.S. dollars we had. The dollar was worthless, but gold was the universally accepted currency.

“Those small gold coins allowed us to buy our freedom and probably save our lives. Ever since that day, I have carried gold coins whenever I leave this country. Our employer made it mandatory that we carry gold coins whenever working in third-world countries.

“So when the mighty U.S. dollar is no longer the accepted currency, you can bet I will have gold.”

The 5: That’s a great story. But how much hassle do you get bringing the coins back into the U.S?

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. From Jim Rickards’ Twitter feed today…

Yes, his talk next week at the Agora Financial Investment Symposium should be entertaining… and informative.

I spent a bit of yesterday reviewing the final speaker lineup with Symposium director Bruce Robertson. It’s truly impressive. Our “Tale of Two Americas” theme is well represented by Rickards’ dark macro outlook… and the bright techno-driven future of Maker movement apostle Chris Anderson, another Symposium first-timer.

We’ll also be joined by familiar faces like Doug Casey, Frank Holmes and Rick Rule… along with the usual complement of Agora Financial editors, including income specialist and first-timer Neil George.

We’re sorry if you can’t make it… but you can now sign up for the recordings. You can choose high-quality audio for maximum convenience, or high-definition video for full access to charts and PowerPoints. Either way, you get the best deal by acting before the Symposium opens next week. Grab your first-mover discount here.


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