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By Ramin Mostafavi
TEHRAN, Jan 15 (Reuters) - Iran warned Gulf Arab neighbours on Sunday they would suffer consequences if they raised oil output to replace Iranian crude facing an international ban.
In signs of Tehran's deepening isolation over its refusal to halt nuclear activity that could yield atomic bombs, China's premier was in Saudi Arabia probing for greater access to its huge oil and gas reserves and Britain voiced confidence a once hesitant European Union would soon ban oil imports from Iran.
Major importers of Iranian oil were long loath to embargo the lifeblood of Iran's economy because of fears this would send oil prices rocketing at a time - amidst debt and deficit crises and high unemployment - when they could least afford it.
But strong momentum for oil sanctions has been created by a U.N. watchdog report saying Iran appeared to have worked on designing an atom bomb.
A new U.S. law signed by President Barack Obama on New Year's Eve would freeze out of the U.S. financial system any institution dealing with Iran's central bank - which processes its oil revenues.
If fully applied, the law would make it impossible for most countries to buy Iranian oil. Washington is offering waivers to countries to let them keep buying Iranian oil for now, but demanding they gradually cut their imports back.
Leaders from some of the Asian countries that buy the most Iranian oil have begun touring the Middle East to secure alternative supply lines from Arab states. European buyers suggest they will also lean more heavily on Arab oil producers should an EU ban come into effect.
Feeling increasingly encircled, Iran's hardline Islamic clerical elite has lashed back by threatening to block the main Middle East oil shipping route. Since the New Year, Tehran also began to enrich uranium in an underground bunker and sentenced an Iranian-American citizen to death on espionage charges.
Tensions in the Gulf have caused occasional spikes in oil prices in recent weeks. The sanctions are also having a real impact on Iran's domestic economy, causing prices of imported staples to soar and the rial currency to tumble
All The Gold Bugs In China
Many analysts thought a death knell sounded for the gold bull market last month. However, driven by surging investment demand in China, as evidenced by record-high imports from Hong Kong, and the recapturing of the 200-day moving average, the gold price added to its gains from the first week of the year, while silver mounted an even bigger surge.
All this occurred despite a stronger trade-weighted dollar (that normally moves opposite of metal prices). However, credit downgrades late on Friday and an expected further decline for the euro are sure to test the recent enthusiasm for precious metals in the days ahead.
For the week, the gold price rose 1.4%, from $1,616.60 an ounce to $1,639.70. Silver briefly topped the $30 an ounce mark for the first time in a month, before ending slightly below that mark. That's up 3.5% from $28.75 an ounce to $29.77. Gold is now down 14.7% from its high last summer while the silver price remains 39.9% below its early-2011 peak.
Surging Chinese gold demand and soaring premiums in advance of the Lunar New Year were by far the dominant stories for precious metals last week. The Hong Kong Census and Statistics Department reported a record 103 tonnes of gold entered the mainland from Hong Kong in November, up from 86 tonnes in October as shown below via Reuters.
22 comments:
All I hear is sabre rattling. Iran is not Iraq, but I don't think they have the good will from their Arab neighbors that they think they have.
I would not want to be in Iran at this time. I also believe that Israel may not wait for us to act. This is an all in hand of poker IMHO.
I think this is a must read that Jesse posted on his blog.
http://jessescrossroadscafe.blogspot.com/2012/01/sachs-price-of-civilization.html
It seems like it is only a mater of time before a conflagration erupts in iran. THEY will simply not permit iran to develop their own atomic bomb. I believe the only reason why this has not yet happened is the US’s concerns about the detrimental effect this will have on world markets.
The question for us ‘Hivers’ is:
How do we, as investors, properly position ourselves to – if not profit from this – keep from losing when this inevitably occurs?
I think that we can take it as a given that Oil will skyrocket while many stocks will plunge, including Boeing and other firms which use (or make products that use) large amounts of gas & oil. Will PM’s go up? What will the $USD do?
Well Mammoth so far the dollar is surging and although I still like gold I have no confidence in J6P moving back into silver. An oil ETF might be a flyer, but if war does not break out I think oil will go down.
Also I think the miners are so oversold and unpriced that I cannot see you going wrong with GDX and GDXJ. If course you can go with mutuals like I have or even the Palidan Fund. Those are my recommendations based on what I see and hear. Silver Doctor is gone again off the blog roll as I don't think it fits and FOFOA is also gone.
Anyone heard of Ubuntu? It is one of the operating systems that have accessed the Hive. We are staying steady at 175-200 page views a day.
Presumably the major oil producers not exposed to Iran would benefit from an oil squeeze. Chevron (CVX) has good fundamentals, a good-looking chart and, and I think, has no Iran exposure. If you want to go broader you could buy the energy ETF: XLE.
I think the oil ETfs like USo have been pretty bad at tracking the price of oil. Yuu 're probably better off gonig directly to the companies.
if you dk buy and prices spike on the rumour, you probably want to sell before any military action starts. happens.
it's got to be said, trying to benefit form this is really going into shark-infested waters. DYODD.
Thanks for the technical view, Mugabe. Here on the ground, there was a local craigslist ad for 32 old silver dollars at spot price ($23/ea). They were gone the same morning the ad went up.
So there are some folks out there who still believe in Silver!
I was too busy digging up some free) cherry trees on Saturday to catch that deal on time. I transplanted them on my property yesterday.
Fruit trees - now that is an investment that pays annual dividends!
Mugabe do you know who does have exposure in Iran? I had a MF VGENX
run by Vanguard in my 401k that had Chevron, BP, Exxon and several other big names. I could diversify a bit and I agree that buying the companies is a better approach.
EXXON MOBIL 9.0%
CHEVRON CORP. 5.5%
ROYAL DUTCH SHELL 5.0%
OCCIDENTAL PETROLEUM 4.2%
BP PLC 3.8%
If you look them up online you can see the entire prospectus. I am not advocating anything. I do like Cherry Trees.
I don't know if any the majors have iran exposure. I imagine they probably don't, but that's speculation.
is thst Vangaurd thing an energy fund? i suppose you could diversify - it all depends what else you've got in your 401k and what your risk tolerance is for it ... to state the obvious.
Yes it is an energy fund so I can leave half in the miners and move half into energy.
Oh, I see, it was all in miners! That's quite an aggessive allocation! So you are diversifying by buying energy.
Wnat to know what to buy in 2012? Marc Faber;
People say large-capitalization stocks are inexpensive, and I agree. I would buy a basket of high-quality big-caps in Europe and the U.S. You can by Total [TOT], in France, which yields more than 5%, and Nestlé [NESN.Switzerland] and Novartis [NVS] and Pfizer [PFE]. These stocks don't have huge downside risk. Because emerging markets saw big declines last year, you could also buy SATS [SATS.Singapore], in Singapore, which provides catering services to the airline industry and ports. It yields 5% and trades for 13 times earnings. I also like K-REIT Asia Management [KREIT.Singapore], a real-estate investment trust that yields 7%. The stock has fallen by about 50% and the dividend might be cut. But even if it is cut to 4%, this is an OK investment. These stocks won't go up right away, but reinvesting dividends will yield an adequate return over time. StarHub [STH.Singapore], the mobile-phone company, yields 6.9% and the P/E is 14.
Much, much more at Barron's rountable:
http://online.barrons.com/article/SB50001424052748703535904577152932179268296.html#articleTabs_article%3D1
Queenbee, I just wrote a post about those cherry trees over on The Dungheap (link is on the left-sidebar).
An investment that you can sink your teeth into...
Mammoth,
You really mustn't cherry pick your investments
Mugabe that was classic and yes I am way to aggressive in my investment style. It worked well in the 3rd quarter of 2011 and I just got killed in the last quarter. I really want to stay the course due to my previous comments about the mining sector. It is also the one I know the most about.
mammoth-I LOVE cherry jam. Too bad the goberment is getting into everything. My in-laws had apple trees for years and they made cider. It was delicious and my father-in-law sold it (along with apples) to people in the community. He had to stop, however, because it was unpasturized and the possibility of law suits entered in. NOW, however, if they pass this new food bill you will not be allowed to sell to ANYONE.
I wonder how that will affect the Amish? We have an Amish market nearby (family member is Mennonite) and they arrive to and from from work with someone ELSE driving (which, IMO, is really circumventing their beliefs for money and convenience...just as their puppy mills do. (not a fan of that). Still, without throwing stones at them, I DO wonder how they will be able to continue supplying farmers markets with relish, jams, etc. as they are all made at home.
Seems to me that goberment just wants a hand in every 'pot' to tax. Too bad there are far too few pots with chickens (or even beans) in them nowdays.
Has anyone noticed a real trend in what I affectionately call 'Pigpen clouds' (named after that Charlie Brown character? People are reacting to the negativity but don't know why. I think it's because they know in their hearts that something is really wrong but don't want to see it or 'can't' see it.
QB,
YOu might be right about the miners, their time may be coming if the general market is going up. But once they've had a good run, I'd consider diversifying a tad. Mark's fund would be good for that. All the best with whatever you decide!
btw, my latest bond rollover will not be into german sovreign debt as it's paying basically 0% for one year. I've decided to plump for iberdrola, Spanish electricity giant, operating in 40 countries, 36 billion dollars market cap, which pays almost 3% for one year. And as it's denominateds in euros, it'll have to be paid in euros even if spain leaves the eurozone. Thiu search for safety and some yield is getting difficult,
Let's see how this first quarter runs for the miners. It should reverse, but my investments are full of "should haves." I won't hang on to long as I am not married to the stocks.
Portugal bit the dust today. A downgrade from Moodys made it so that all major ratings agencies rate their bonds as junk. This forced many investment firms to immediately dump their bonds. Greece v2.0 has arrived. The Troika Commissars will arrive in Lisbon to "negotiate" another "bailout" right after they leave Athens, where they're trying to get the Greeks to accept a debt deal they have no mathematic possibility of completing.
I heard on Howe Street that Greek Bonds were at 400% so that ought to tell you the writing is on the wall. Thanks Mr K. for the Portugal update.
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