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Gold and Energy Advisor's Real Wealth

Real Wealth #240  07/07/2009

Obama's VP Hints at Holy War? 1st in a two-part series on energy, history and the road to financial salvation



Dear Gold & Energy Subscribers,


The following is the first of a two part a guest article written by John Myers who is the editor of the Myers Gold & Financial Advisory. John has agreed to contribute a steady stream of articles to the Gold & Energy Advisor...


There are many combinations that don’t go together.  Whiskey and handguns are one.  Another is nuclear weapons and oil deposits.  We saw the mention of the latter this past weekend on a few occasions from the vice-president of the United States, Joe “I’m no dove” Biden.


When all was done -- say it ain’t so Joe -- told The Los Angeles Times that the Obama administration would not stand in the way if Israel chose to attack Iran's nuclear facilities, even as the top U.S. military officer said any attack on Iran would be destabilizing.


On TV’s “This Week," Biden also said the U.S. offer to negotiate with Tehran on its nuclear program still stood.

"If the Iranians respond to the offer of engagement, we will engage," Biden said.

Biden was asked whether Israeli Prime Minister Benjamin Netanyahu was taking the right approach by indicating that Israel would take matters into its own hands if Iran did not show a willingness to negotiate by the end of the year.

"Look, Israel can determine for itself -- it's a sovereign nation -- what's in their interest and what they decide to do relative to Iran and anyone else," Biden replied. He added that this was the case, "whether we agree or not" with the Israeli view.’


Holy Cow! The VP’s talking Holy War

Biden was then asked whether the U.S. would stand in the way if the Israelis decided to launch a military attack against Iranian nuclear facilities.

"Look, we cannot dictate to another sovereign nation what they can and cannot do," he said.

Reminded that the U.S. could impede an Israeli strike on Iran by prohibiting it from using Iraqi airspace, Biden said he was "not going to speculate" beyond saying that Israel, like the U.S., has a right to "determine what is in its best interests."


Biden said, “We are not going to speculate?”  That is exactly what he is doing with that type of talk and don’t think he is clueless to what kind of fire he is playing with.


Let’s leave the Middle East and travel to the island of New Guinea.


Current evidence indicates that the Papuans (who constitute the majority of the island's peoples) are descended from the earliest human inhabitants of New Guinea. These original inhabitants first arrived in New Guinea at a time about 21,000 years ago.  For thousands of years the islanders lived in relative harmony, which was a good thing given potential resource shortages. 


For example, New Guinea has only five freshwater eco-regions.  In an age before time was counted, and still marching on, the five watering spots were left untouched.  And for good reason, nature’s water bins have provided the lifeblood for that island for tens of thousands of years and New Guineans had the good sense to keep them sheltered.


Today’s modern blood is oil and is every bit as essential as water.  And like New Guinea, there are about five concentrated places where oil rests.  In northern Alberta and Saskatchewan which are the oil sands, in Latin America, in what was once the Soviet Union, and finally in North Africa and around the Persian Gulf.


It is the last region that is by far the richest of the world’s oil keeps.  Nearly two-thirds of the world’s oil is buried beneath these sands – sands that are perhaps even now being driven by winds of war.


The Web is great.  It lets you go instantly back to a time, read what someone predicted, someone perhaps like yours truly, and see if he or she was right. 


I’m on a site from 2006 which said Iran definitely did not have nuclear weapons then, but would most certainly have them in two years.  More recently a similar think-tank predicts Iran to have operational nuclear ballistic missiles in less than two years.


Ground Zero


The greater-Middle East sits to the south and west of Iran, along with Iraq; in all 500 billion barrels of oil – about half of all the world’s conventional oil.  It is also the majority of the world’s best, light, enriched crude.  It sits on transportation freeways and it is cheap... incredibly cheap to pump and transport.  Without it, the world would be a much poorer place.


The clock is ticking down on two heavyweights – Israel and Iran.  With so little still really known about Iran’s capability, maybe there are more tactful ways for Mr. Biden to build a more, and not less, peaceful world.


Finally, I saved the best for last, the part about making money.  The price of crude oil carries a risk premium.  When oil prices were around $14 per barrel in the late 1990s the world hadn’t heard of Al-Qaeda. The U.S. was protecting the world’s big oil fields and keeping Saddam Hussein pinned down.  Oil is a long ways up from those days, but it seems to me the risk premium is growing quickly.  In other words, a nuke doesn’t have to explode over an elephant oil field for oil prices to surge.  There just needs to be sufficient fear that a nuke “might” explode over an elephant oil field. In other words I am very bullish on oil.


Yours for real assets,




John Myers

Editor, Myers Gold & Financial Advisory


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