Saturday, 13 March 2010

The Daily Reckoning

Dear Daily Reckoning Reader,

Could oil and gas prices soar to record new levels by 2011?

You'd better believe they could.

In the report below you'll see proof on how a devastating 1,354-year- old destructive force has been unleashed in the Middle East - and how it could be about to freeze world access to OPEC oil in a way even the Iraq wars never did!

You'll even learn the steps you need to take to shield your wealth if this happens.

I urge you...if you read anything this weekend, make it the report below.

Byron King
Resource Expert for The Daily Reckoning

1,354 Years in the Making:
The "NEW" War
That Could Rocket Oil
Past $220 Before 2011

by Byron King, Editor

What could be eight times bigger than the wars in Iraq or Afghanistan — and lethal enough to at least DOUBLE the price of gas and oil next year?

Brace yourself for the "new" and bloody war nobody saw coming... by bunkering down against soaring energy costs, thanks to a "safe haven" financial plan that could pay you gains up to 668%...

Nobody in the Pentagon will talk openly about it. Nobody in the White House knows what to do.

But make no mistake...

What I'm about to show you could be the deadliest surprise threat to your money and livelihood of the coming year.

I say "new" because as you'll see there's not much new about it at all — the pressure's been building behind this for the last 1,354 years!

Yet for the first time in history, that pressure has found its release. I’m imagining a volcano of blood.

When it blows, you could see your savings get SLAMMED... the dollar thrown into a TAILSPIN... and, here's what will stun the still-recovering world economy, gas and oil prices doubling or even tripling by sometime early in the coming year.

How on earth is that possible?

It's the last thing most people expect, from market pros to bumbling D.C. bureaucrats... but if nothing changes in what I'm about to show you... this is a page in future history books that's already writing itself.

I'll show you the evidence myself.

If I'm right, as many as eight key Islamic countries are hurtling headlong toward a bloody "new" war — with each other — that's been FOURTEEN CENTURIES in the making.

This could begin as early as the next 12 to 18 months. And with no less than 66% of the world's key energy reserves smack dab in the crosshairs.

Sound impossible?

Even if I'm only half right, and we get an oil-state stalemate unlike anything the world has ever seen — you could see oil soar past the old high of $147.30 per barrel, well on its way to as much as $220... with gasoline bucking against a ceiling of $8 per gallon.

I'll show you how this unfolds below.

You'll see the maps, I'll name the names. And I'll reveal to you the stunning web of "secret revenge" that lies behind it all... waiting over 1,354 years for this moment!

Soaring Oil Costs, Even a Dead Economy?

Remember the "Nixon Shock" and market collapse of '73? Stocks fell 43%... but that didn't stop oil and gas prices from quadrupling thanks to an Oil Embargo.

And how about 1979 and gas lines? Even with Jimmy Carter's "malaise" and stagflation, oil prices almost tripled... thanks to the hostage crisis in Tehran.

It was oil that German subs targeted in both World Wars... and oil Japan gunned for in Pearl Harbor... even Afghanistan is part battle over a $3.2 billion oil pipeline.

After the S&L banking crisis of the late '80s, oil still soared in Gulf War One... and soared again on 9/11, despite the aftermath of the dot-com bomb. It took off again in 2003, as bombs dropped on Baghdad.

With politics as a driver, oil doesn't need a red-hot economy to take off... even the last peak of $147 came six months after the Dow first started shedding points and two years after property markets turned south!

Of course, events like these echo around the world.

And nobody gets the chance to just "sit on the sidelines."

But there's good news too.

Because, you see, just like every major shift of history... deep within every crisis... you'll also find an opportunity to protect yourself. And this event is no exception.

For instance, the last time we saw politics push up the price of petroleum, my readers found strategic gains in a "self-defense" move that shot up by 668%.

In fact, we've used all kinds of moments in flux to make protective and even impressive gains. Take a look at this small sample, drawn straight from our posted track record...

Our Strategic Gains in Turbulent Times

137% gains on KeyWest Energy 174% gains on PetroChina
151% gains on Wheaton River Minerals 270% gains on the July silver calls
162% gains on Intrepid Minerals 104% gains on the ICON Energy Fund
332% gains on Glamis/Francisco Gold 108% gains on Norsk Hydro
668% gains on Metallica Resources 118% gains on Anglo American PLC
105% gains on Gentry Resources 160% gains on Western Oil Sands
151% gains on Tocqueville Gold 182% gains on Talisman Energy
228% gains on Niko Resources 142% gains on BG Group
263% gains on Coeur d'Alene Mines 177% gains on Coeur d'Alene Mines again
116% gains on Cameco

And we continue to post new gains, even now. Some of today's open positions have already shot up 37%... 45%... 46%... 53%... 61%... 64%... 70%... 75%... 128%... 146%... 155%... 160%... 200%... 403%... and 466%... with more to come!

(I can't name those stocks for you right now. That wouldn't be fair to my readers. But I'll tell you how to find out about all of them, right after you finish reading this letter.)

My point is, today's moment is even larger than anything we've seen before. But so are the opportunities I see right now for you to protect yourself. I'd hate for you to miss any of them, while you still have the opportunity to make your move.

Over the next four minutes, I'll show you how.

But before I do, let's step back so I can explain how this "war" begins.

Long before $147 oil... before the war over 9/11 or the war in Afghanistan... before either war in Iraq, the 1979 Iran hostage crisis, or even the oil crisis of 1973.

All the way back to a lamb dinner, served up one evening in the year 629 AD...

The Murder That's About
to Change the World

Nobody could have known that the dinner they were about to eat would one day change history. Some say it was goat. Others say it was lamb.

Either way, it was poisoned.

And the guest of honor was Mohammed, the controversial founder of Islam.

It was just one bite, that's all it took. He tasted the poison and immediately spit it out. But it was too late. He would soon die, sparking a bitter and deadly divide.

See, when Mohammed died nobody could agree on who should take over...

And they've been killing each other as a result ever since.

On the one side, you've got the Sunni Muslims. They're the ones that run Saudi Arabia, Egypt, Jordan, and many of the other countries in the Middle East.

On the other, you've got the Shia Muslims. It's the Shia that run Iran. And now run Iraq, as well as Lebanon and Syria.

Think Protestants and Catholics in Northern Ireland... Serbs vs. Croats in Bosnia... or even the religious Thirty Years War that ripped apart Europe in the 16th century.

Only this Sunni-Shia split has built up pressure now for the last 1,354 years.

But it's only now that this pressure has found its ultimate release — with Iran driving a new Shia uprising smack dab in the middle of the most dangerous place on Earth — the oil-soaked Middle East.

Isn't the Middle East already a mess? Yes, it is.

What's different is that too many in the West... right up to the White House and the Pentagon... don't "get" just how deep this Islam divide could go or how far it could run.

Take a look at this map...

The Deadly Sunni-Shia Divide — 2010-2011

If it's black in this map, it's Shia ground. It's also mostly oil heartland
and some of the most strategic territory in the entire Middle East!

One terrorist with a grudge can do a lot of damage.

Iran, all by itself, could even be a deadly force.

But can you imagine what millions of Shiites with a 1,354-year old ax to grind could do?

The 162-Million-Man March

Nobody knows exactly how many Shia there are right now in the Middle East. That's because in all but four Middle Eastern countries, Sunni leaders don't bother to count.

Sunni schools teach that Shiites aren't real Muslims. Shias don't get a seat in government. They can't become judges or even testify in high courts. In Sunni-run Saudi Arabia, Shias and Sunni can't even marry.

For centuries, the Shia have been the underclass.

But now, for the first time in history, they see this as their chance to turn the tide. And how big a tide is it? Hands down, saber-rattling Iran has the most — 70 million Shia.

But then you've got the "liberated" Shia of Iraq — 22 million. Plus as many as 2 million Shia in Iran-backed Lebanon. And up to 4 million Shia in Iran's top ally, Syria.

Then you've got another 700,000 Shia in Kuwait... up to 500,000 Shia in Bahrain... up to 400,000 Shia in the United Arab Emirates... 300,000 Shia in Oman... and around 100,000 Shia in Qatar, according to the Pew Research Center in Washington.

On top of that, as many as 10 million Shia in Yemen... another 7 million Shia in Azerbaijan... and 11 million Shia in Turkey... not to mention the combined 30 million Shia in Afghanistan and Pakistan.

Not all Shia want a revolution.

But out of between the 147 million to 162 million Shia spread from Pakistan to Lebanon and Azerbaijan to Yemen, enough do that this is the river of "Secret Revenge" and common blood running through the entire Middle East.

The Sunnis are worried.

Especially in Sunni-run Saudi Arabia.

And especially now.

Here's why...

"New" Oil War Flashpoint #1:
The Real Reason Iran
Wants the Bomb

Don't forget, Iran used to be Persia.

At one point Persia was the biggest and most powerful empire in history!

Iraq, Syria, Turkey, Egypt — even Israel — the Persians controlled them all. Along with all of Afghanistan and Pakistan and most of the oil-rich coast of the Caspian.

For 300 years, Persian armies held off the Roman Empire. Their scholars walked with Aristotle and Plato. And influenced Greek art.

It was the Persians who invented chess. And the windmill.

Not to mention bricks, algebra, trigonometry, and wine.

The bottom line is... no Empire forgets its past glory.

The Iranians resent losing theirs.

But now they see a chance to get it back.

The nuclear bomb? Tehran's crackpot leaders don't just want it to scare Israel. They want it so they can throw a dark shadow over their Sunni Arab neighbors, too!

Take a look at this...

Iran's First Move...

With total control of the Hormuz "oil chokepoint" in the Persian Gulf
and new power in "liberated" Iraq, the Iranians have a brand new foothold
for kicking off the long-awaited "Shia Revolution."

You'll notice two things.

First, you'll see how Iran's Shia influence has spilled across the border into southern Iraq. Southern Iraq is where you'll find six of Iraq's eight "Supergiant" oil fields. It's also where you'll find a key border with Shia Islam's mortal enemy — Saudi Arabia.

Saudi Arabia is Sunni.

For eight years back in the 1980s, Saudi Arabia helped Iraq wage a bloody war against Iran. Along with other Sunni governments, the Saudis even gave Saddam over $47 billion to launch missiles and nerve gas attacks over the Iranian border.

Iran hasn't forgotten. Or forgiven.

(Imagine if Canada or Mexico had given money to Japan to help them bomb Pearl Harbor. Iran has waited to make the Saudis pay — and now they have their chance.)

"Iran is clearly seen as a very serious threat by those on the other side of the Gulf front."

— Gen. David Petraeus,
Jan. 31, 2010

The second thing you'll see in the map above is that Iran has almost total control over the Strait of Hormuz.

Hormuz is the tight waterway that connects the Persian Gulf to the Mediterranean. Over 17 million barrels of oil have to pass through Hormuz every day.

That's 40% of all the oil shipped in the world.

And 90% of all the daily oil shipments from the entire Middle East.

With Hormuz alone, Iran could cripple the world overnight.

Today, Iran backs Shia militants in Iraq. They give them money and guns. They've even helped Shia politicians take over the Iraqi government. Why?

Because gaining control in Iraq takes the Iranians one step closer in their twisted plot for secret revenge. For another one of those steps, just look further south... to Yemen.

"New" Oil War Flashpoint #2:
Yemen's Ugly Secret

The Pentagon has just tripled its budget on Yemen.

Top U.S. General Patraeus just had a not-so-secret meeting with Yemen's president.

And our own State Department calls Yemen a “threat... to global stability.”

What gives?

Even ABC News just called Yemen the next "top target" in the terror war and a "near-perfect haven for terrorists." Obama just sent Yemen our troops, ships, and weapons.

Here's what's happening...

The Shia Revolution's Next New Front...

Yemen's on/off Shia revolution gives and "Gate of Tears" oil chokepoint
could soon give Iran a strategic "backdoor" attack point into Saudi Arabia...

Yemen might be a failed country... with a collapsing government, a shrinking oil supply, an exploding population and not much of anything else but lawlessness and chaos.

But what Yemen does have is position.

It sits just on the tip of the Arab peninsula... south of another key Saudi border and on the coast of another key oil strait called Bab-el-Mandeb.

That name means the "Gate of Tears."

How Islam's Next "New"
World Oil War Will Begin

"Nature," goes the old saying, "abhors a vacuum."

For instance, when a failed assassin's bullet burst a blood vessel in Vladimir Lenin's brain in 1922... madman Josef Stalin quickly stepped in to fill the void. Likewise when the Weimar Republic collapsed in 1933... and Hitler stepped into power.

Today there's a new void about to be filled — in the ravaged Middle East — and the lethal force that's stepping up to fill it could plunge the entire region into a "new" Islamic war.

If that happens, nearly 66% of the world's oil supply will get caught in the crosshairs.

Soaring energy prices can hit almost every aspect of life... and pummel any economy... but there are ways you can protect yourself, financially. Read on to find out how...

And like Hormuz, most oil states on the Red Sea can't get a drop of oil out without shipping it through the Bab-el-Mandeb. Over 3.3 million barrels go through every day.

Blocking this chokepoint alone could slap a $30 "political premium" on the price of every barrel of oil... but there's an even bigger threat taking shape.

For the last six years, Yemen has fought a vicious and bloody war with Shia rebels. These rebels are poor. There's no way, says a Yemen general, these rebels "could fund and fight this war with pomegranates and grapes... no doubt there is Iranian support."

Could it be true? Absolutely.

Iran loves to buy loyalty.

Take the $1 billion Tehran now "donates" every year to Hezbollah terrorists in Lebanon. Or the billions they gave Syria's Shia president to build cement factories, car factories, power plants, and storage silos.

In return, Iran gets Hezbollah's Arabic-speaking terrorists to run militant Shia training camps in Iraq. And gets Syria to distribute Iran's money and weapons to others in the Shia network.

The secret money Iran sends to Shia rebels in Yemen could soon have a payoff too — by opening up another route for "backdoor" Shia access into Saudi Arabia.

Yemen's rebels have already hit towns across the Saudi border. And the Saudis have hit back, losing dozens of troops in the process. We’re just in the first innings of this one.

How bad is it?

So far, 50 Saudi schools along the border have had to close. Another 240 border towns have already been evacuated. And Saudi jets have already dropped bombs in Yemen.

What exactly has the Saudis running scared?

Final Oil War Flashpoint #3:
Iran's Final Prize — Saudi Oil

Don't think for a minute that I think Iran's plot for "secret revenge" could succeed.

But the threat alone could be enough to kick oil much higher.

And sooner than you might think.

For instance...

  • Our CIA, Britain's M16, and other top spy agencies say Iran could have a working nuclear bomb as soon as April 2011...
  • The Times of London uncovered a confidential document that says Iran already has a "neutron initiator" ready to test. That's the part you need to trigger a warhead.
  • And Der Spiegel, the German magazine, says Iran may even have the tech and material to build a simple nuclear bomb before the end of THIS year.

But the Bomb is just a beginning.

Even if the go ahead to build a nuke never comes from Iran's top cleric, the more immediate danger is a wildfire of Shia-Sunni unrest... starting in Iran's new hotbeds of Shia support... and spreading across the rest of the Sunni-run oil states... with the richest oil fields in the world's richest oil nation as the final battleground.

Take a look at this last map...

The Final Battleground — Saudi Arabia!

Suddenly, Iran has its mortal enemy, Saudi Arabia, surrounded —
millions of Shia even live on top of the Saudis OWN biggest oilfields.

As you can see, Saudi Arabia looks like a sitting duck.

Iran has a Shia network that reaches from Afghanistan to Lebanon once again... more connections building along the Persian Gulf... Yemeni Shias to the south... and Shia connections along the oil rich Caspian Sea.

You could see this spread to the nearly two million Shia that live and work on Saudi Arabia's oil fields very soon. Even though that's exactly what the Saudis — and our own Pentagon — hope will never happen.

As you read this, big and small Gulf states are piling up weapons, stocking anti-missile batteries, and sandbagging their oil terminals, ports, and water desalinization plants...

Abu Dhabi alone has already bought $17 billion worth of U.S. anti-missile hardware. And the United Arab Emirates and Saudi Arabia just splurged on weapons, to the tune of $25 billion.

As you read this, our own F-16 fighter jets, Patriot missile systems, giant cruisers and up to 20,000 more U.S. troops are quietly digging in for an epic fight... that could spread past Iraq and Yemen... and even into Qatar, the United Arab Emirates, and Bahrain.

All to get ready for what could be the fight of a lifetime...

Say Hello to the "Jihad Generation"

It's not just our experts saying it.

Leaders in all three of America's biggest Middle East allied countries — Egypt, Jordan, and Saudi Arabia — claim the epic Sunni-Shia showdown is in the cards.

It could start from any one of the flashpoints I just named.

But no matter how it starts, Saudi Arabia is where it's most likely to end up. Why?

Not only is Saudi Arabia home to Mecca, Islam's holiest place... but it's also home to the corrupt and U.S.-allied Royal House of Saud, considered an insult to all Islam.

Think about it.

In a country where they'll cut off your hand for stealing and whip you for holding a glass of whiskey... Saudi princes gorge on cocaine and prostitutes, gambling, palaces, and more.

All while the vast Saudi underclass starves on just $6,000 per year and 30% unemployment. And as many as two million of that underclass is Shia. With a 1,354-year-old ax to grind and billions of dollars in oil revenues as the prize.

It's a near-perfect formula for a FULL-ON war.

And the fuse is already lit.

Iran is ready to assert its place in the world. Think Japan or Germany in the 1930s. The threat is there, it's large, and it's not going away anytime soon.

How the world responds, we can't know.

But I can tell you how oil could respond... by exploding to new record highs. Possibly as high as $220 per barrel by spring of the coming year... with gas not topping out until it hits as much as $8 per gallon.

That's very bad news for millions around the world.