I’m very worried. So is my family.
Iraq is collapsing.
Iran is erupting.
And the entire Middle East, with 35 times the oil reserves of the United States, could be engulfed in the melee.
The potential impact on your money is incalculable. So pay close attention to what I have to say this morning.
If you ignore these rapidly escalating events, you could suffer irreparable losses. But if you connect the dots and take appropriate action, you can not only protect your wealth but you could expand it at an accelerated pace.
I’ll point you to the investments that could make that happen in just a moment. But first, take a closer look at our recent warnings, how they’ve panned out, and what it could mean right now …
We Warned of the
Civil War in Iraq
Three Months Ago
On January 9, in my Money and Markets article “Break Points,” I wrote:
“The critical break point in the future of Iraq and the region will come when the majority Shiites fight back.
“The dominant Shiite political party, the one that won the single largest block of votes in the coalition-sponsored elections, was none other than the same group that’s most directly supported by Iran. When this group decides to fight back, the outright civil war in Iraq will begin.”
At the time, few analysts dared even mention the words “civil war.”
But just six weeks later, that’s exactly what we got:
Sunni insurgents bombed the Shiite’s sacred Golden Mosque in Samarra, unleashing wave after wave of revenge killings that have continued to escalate till this very day.
Indeed, on Friday morning, the Sunni insurgents did it again — this time bombing the Buratha mosque in Baghdad, used as the center of operations for the dominant Shiite political party.
At least 79 Shiite worshipers were killed. Another 160 were wounded. And now, a new, even more virulent wave of revenge killings is expected.
But this time, analysts warning of civil war are no longer a lonely minority. For the evidence, read these words:
Iraq is on the brink of an all-out sectarian war. Such a war could engulf the entire Middle East. And if it does, it would have the most serious consequences for both the region and the world.
These are not my warnings extracted from an old issue of Money and Markets. Nor are they coming from an anti-war fringe. They are the key points made Friday in a statement by Zalmay Khalizad, America’s Ambassador to Iraq and one of the most loyal members of the Bush Administration.
This is serious. It will impact your money. But, unfortunately, it is actually not the more serious threat we face today:
Iran! We Also Warned You. And Now,
The War Drums Are Deafening.
On January 19, in his article “Iran Erupting,” Larry wrote:
“A new Iran crisis is bursting onto the scene … [Iran’s President] Ahmadinejad seems to be working overtime to pick a fight, not just with the U.S. but with the entire Western world.
“The bad news is that I believe he’s going to get his wish. After months of political jockeying, phony diplomacy, and useless economic sanctions — mark my words, we will be at war with Iran.”
Again, few people believed him. Even I was skeptical. But just days later, the crisis burst onto the headlines as talks with Iran broke down and the countdown for a major showdown began.
Now, according to the Washington Post …
“The Bush administration is studying options for military strikes against Iran as part of a broader strategy of coercive diplomacy to pressure Tehran to abandon its alleged nuclear development program, according to U.S. officials and independent analysts.
“Although a land invasion is not contemplated, military officers are weighing alternatives ranging from a limited airstrike aimed at key nuclear sites, to a more extensive bombing campaign designed to destroy an array of military and political targets.
“Bush views Tehran as a serious menace that must be dealt with before his presidency ends, aides said, and the White House, in its new National Security Strategy, last month labeled Iran the most serious challenge to the United States posed by any country.”
Separately, the just-released April 17 issue of New Yorker magazine reports that the administration is seriously considering using “bunker buster” tactical nuclear weapons against Iran to ensure the destruction of Iran’s main centrifuge plant at Natanz.
Hard to believe? Perhaps.
But the fact is that the Iranian government has launched a program to reinforce key nuclear sites, such as those at Natanz and Isfahan, by building concrete ceilings, tunneling into mountains and camouflaging facilities.
So it would not be unusual for the discussion in the Pentagon and the White House to focus on what it would take to penetrate those barriers.
In response, Iran has been conducting a series of high-tech weapons tests in the Persian Gulf, displaying its defensive hardware, test-firing sophisticated new weapons systems, and proclaiming its readiness to repel a U.S. attack.
The drumbeat of war is quickening.
You can see the pattern vividly in Iraq and Iran.
You can see it in the Palestinian Territories with the rise of Hamas, a terrorist organization. (For details, read “State of Shock.”)
You can see it by looking back at the cold war and the parallel decline of the dollar (“The New Hot Cold War”).
And you can also see the pattern in the centuries-old cycles which Larry described to you two months ago (“The Cycle of War”).
Nothing is inevitable. But the evidence is overwhelming. And no one can predict the financial consequences with precision. But the dots connect directly to your investments. The main reason:
Over 66% of All the World’s
Proven Oil Reserves Are in the
Persian Gulf and Middle East
You don’t have to go very far to find the evidence. Just check the latest oil reserve estimates on the website of the U.S. Energy Information Agency.
Mid-East countries currently have an estimated 743 billion barrels of oil reserves.
That’s seven times more than the reserves of the next largest sources — Africa and Latin America, each with only 103 billion barrels.
Eastern Europe and the former countries of the Soviet Union have 79 billion. And, excluding the tar sands of Canada, which are largely out of reach, North American reserves are only 40 billion, with just half of those in the U.S.
So even adding up all the other sources on Earth … even with all the recent discoveries in other regions … the reserves now potentially jeopardized by wars in the Mid-East still represent a whopping two-thirds of the crude oil on the planet.
This is the most unfortunate convergence I’ve ever witnessed between the press for war and the pressures of growth.
It’s a key reason why crude oil prices failed to come down very much in this year’s first quarter …
why they held so firmly to their long-term uptrend …
why they rose so sharply last week, and …
why they’re now on the verge of challenging their all-time highs.
The Convergence of War and Oil
Is Also a Key Factor Behind
Exploding Gold Prices …
Many of the world’s most powerful central banks and wealthiest investors are in the Middle East. More so than any other players in the international markets, they can see the handwriting on the wall … smell the fear in the air … and virtually touch the dark clouds above them.
They’d be unforgivably imprudent if they did not take the precaution to move increasingly larger allocations of their petrodollars into gold.
Result: Gold prices aren’t just going up! They’re exploding.
Larry specifically pinpointed the critical break-out in gold back on December 15 of last year — in his Money and Markets email “A Sneak Preview of 2006 and Beyond.”
That’s when we published his chart, showing his forecast for gold at the time: “Well over $600 in 2006.”
That’s also when he pinpointed the critical break-out in gold from its upward channel — a break-out he said signaled the “next phase in the gold bull market.”
Sure enough, after that break-out, gold’s rise entered a new, accelerated phase. And we remain right on target with the precise coordinates Larry gave us last year for the next moves:
Target #1. $618, which could be reached within days.
Target #2. $740, which, despite any near-term pullback, could also come very soon.
And, looking beyond the immediate horizon, $1,000 — or even $2,000 — for gold doesn’t sound nearly as far-fetched as it did just a few months ago.
Larry doesn’t like silver as much as gold because its market is less liquid and because it doesn’t share with gold the critical property of being a monetary metal.
Central banks don’t keep silver reserves. And the worldwide flight from paper money rarely takes investors directly into silver.
Nevertheless, with all commodities booming, silver is certainly not one to be left behind. Quite to the contrary, silver is now displaying one of the rarest of patterns in the history of markets: It’s going practically straight up.
Needless to say, when markets are in a straight-up mode, it’s not a good time to buy. But as soon as you see a pullback, be it from this level or higher, buying some of the related investments will be something to seriously consider.
Oil, Gold and Silver Investments
Have Already Appreciated Dramatically
In Recent Months. But That Doesn’t
Exactly Make Them Bad Investments!
There are two times to buy:
Scenario A. When an investment is very cheap, and you have every reason to believe it’s undervalued, or …
Scenario B. When an investment is already demonstrating a solid track record of long-term growth, and you have no reason to believe it might be overvalued.
In 2001 and 2002, when we first began recommending natural resources, it was clearly Scenario A: The value of oil, gold and silver had been declining for decades. We felt they were greatly undervalued. But we had only our understanding of the fundamentals to show us the way. If anything, their track record during the previous years had been terrible.
Now, in 2006, we have no doubt it’s Scenario B. Although we’re off the bottom, we now have an advantage we didn’t have in 2001-2002 — a solid three-year track record of superlative performance.
Consider Enerplus (ERF), for example, one of our favorite energy investments.
This Canadian oil and gas royalty trust boasts a dividend yield of 8.53% PLUS a nice, steady growth which has more than doubled investors’ money over the last couple of years.
On Friday, it fell 1.2%. But it’s still well within the parameters of its continuing, long-term upward trend.
Or, look at U.S. Global’s Global Resource Fund (PSPFX). Compared to 
mutual funds in general, this one has the obvious advantage of having been in the right sector for the past three years.
But overall, it also boasts a long-term track record of outperforming most of its peers most of the time.
We see even better gains in our favorite silver companies, which we’ve been recommending in my Safe Money Report.
And if you really want to turbo-charge your wealth-building, seriously consider the hottest market of all — uranium.
If Mid-East crude oil reserves are threatened by war, then the rush for uranium deposits, already well under way, will become a stampede.
Fortunately, the overwhelming bulk of those reserves, in countries like Canada and Australia, are far away from the conflicts. And fortunately for you, the best companies can still be bought at very reasonable prices, giving you leverage of up to 43-to-1.
In his latest update, published just this past Friday, Sean gives you all the details of what he and Larry have picked out. (They’re planning to get their next set of recommendations out Thursday. So to receive them, you’ll need to be on board by Wednesday night.)
And never forget: No matter how exciting markets may become, always keep a substantial chunk of your money tucked away in a safe haven such as U.S. Treasury bills or Treasury-only money funds.
Good luck and God bless!
Martin
For more information and archived issues, visit http://www.moneyandmarkets.com.
About MONEY AND MARKETS
MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Jennifer Moran, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
© 2006 by Weiss Research, Inc. All rights reserved.
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