Dear Member,
Since I first debuted my predictions for rising global geo-political instability and war at the January 2013 Weiss Wealth Summit in Palm Beach Gardens, FL, we have seen the world turn inside out.
The war cycles have ramped higher even more rapidly that I had expected. We have seen …
• Worsening unrest in the Middle East. In Syria. In Egypt, in Libya and Yemen.
• Rising social protests throughout Europe.
• More and more saber-rattling from North Korea.
• Protests in Thailand and Venezuela.
• Separatist terror attacks in China.
• And more.
In fact, according to the most recent data from Wikipedia, since January of last year …
* 201 terrorist attacks have been staged worldwide.
* There are now eight countries officially at war in the Middle East, involving 163 different militias, separatist and anarchic groups.
* In the Congo, Mali, Nigeria, Somalia, and the Sudan — there are now 24 countries and 141 different groups involved in wars.
* In Europe, there are now eight countries involved in official wars involving 65 different groups of militias, guerrillas and separatists.
* In the Americas, war is taking root as well, where over five different Latin American countries are experiencing war-like conditions involving more than 25 separatist groups.
All told, there are now a near record high 60 countries around the world in various stages of domestic and international war, involving 512 different militias and separatist groups.
And as I have been saying all along, sadly, it’s going to get worse, as my research shows that the world is still on the cusp of a ramping up of the war cycles and a very dramatic increase in geo-political conflict and social unrest that will not peak until the year 2020.
The situation in the Ukraine is major. Do not underestimate it.
The chief reason: It is the first major conflict to erupt in this new cycle of rising geo-political discontent and war that directly involves three major economic regions: Russia, the European Union, and the United States.
Historically, the Ukraine has been at the center flash point of several major incidents, including a deadly famine under Stalin in 1933 … a historic massacre of Jews in 1941 … and one of the world’s worst nuclear disasters, Chernobyl, 1986.
Moreover, the Ukraine is a country with a very important and strategic economic position.
First, it is and always has been a key country, geographically and politically wedged between Russia and major European markets.
— Half of Europe’s gas needs flow through the Ukraine, with most of that gas supplied by the Russians.
Moscow has cut off the gas flow in past disputes with Kiev and the mere threat of a disruption now is already sending energy prices higher.
— The Ukraine is a major breadbasket to the world. While ranked sixth in terms of total exports, most of the Ukraine’s exports go directly to Europe, Asia and Africa — regions that need it most.
In 2013, the Ukraine harvested an all-time record high 62.9 million tonnes of grain. But due to cold weather and the political unrest, current production is in a tailspin.
— The Crimean peninsula in the Black Sea is home to the Russian Black Sea Navy. While according to various reports the fleet is dated and home to some of the oldest naval equipment in the world, the base is also home to over 2,500 Russian marines, enough to deploy quickly, as has already been done.
Keep in mind that the Russian Black Sea Navy has been around in the Crimea for nearly 200 years. It is a remnant of the old Soviet Empire.
But as I’ve mentioned in the past, Putin is an oligarch and a dictator and wants nothing more than to resurrect the old Soviet Union.
Second, the Ukraine is a microcosm of the nature of the war cycles that are ramping higher. At their root, as I explained at the January 2013 Weiss Wealth Summit, is class warfare.
In the Ukraine, the protests got started due to the corruption endemic in the country’s government.
President Yanukovych, now on the run, had one of the most lavish palaces ever seen, and rumors are circulating that over $38 billion of Ukrainian wealth has been skimmed off the top of the country’s coffers by him and his family and their crony and corrupt nepotism.
Third, the Ukraine is a weak, debt-riddled country. Its debt currently stands at roughly $30 billion against foreign exchange reserves at just $15 billion. Moreover, the country’s external debt is largely with Russia, putting the country at the mercy of Putin.
Right now Putin has already sent in troops. Meanwhile, Washington is talking about sanctions against Russia. There is no telling how far this situation could escalate.
It may worsen, or it may lighten up a tad for a while. No one can say for sure.
But I do know this: As I have been saying all along, it is the ramping up of the war cycles that will cause the next major bull markets in commodities and in the equity markets.
Right now, we are starting to see the initial impact. For gold and commodities in general, a fear-driven trade is sending them sharply higher today.
For the stock market, we are seeing a fear-driven reaction in the opposite direction, down.
Longer-term, you can expect both commodities and stocks to move substantially higher due to increasing geo-political risk. Both stocks and commodities will become safe haven plays.
But in the short-term, it’s a different story:
First, I do NOT expect this gold rally to last. Even if gold bottomed back on December 31, gold’s current rally will soon fizzle out and lead to another leg down. It will be that next leg down that will determine whether or not the December 2013 low was a major low.
Bottom line: Hold your bearish gold positions! Ditto for crude oil.
Second, as for the stock market, as I have maintained, a correction was way over due and has started. It’s not clear yet if there will be one more high in stocks before the real sell-off begins, but I do know this: The big move — to Dow 31,000 and higher — is not yet here, and that the risk and short-term profits, will be found on the bearish side, for now.
Bottom line: The war cycles are ramping up even faster than I had expected. That means we all need to stay very tuned in to the markets now. Expect many more trading opportunities coming up soon.
Best wishes,
Larry
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