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Threats of further violence from the son of Quadaafi
is having rather exactly
the opposite effect that the toppling dictatorship had hoped. With defections
among army and government to the side of democratic protesters, the fate of
the Quadaafi government is as good as sealed.
It is as expected. The success of grass roots
protests in replacing oppressive and authoritarian regimes in Tunisia and
Egypt has ignited the imagination of the long-oppressed in other nations,
both within and outside of the Middle East. The latest emerging unrest has
now appeared in China, and that has leaders on edge. But more importantly,
global markets, still fragile despite the recovery of specific sectors, could
be tilted off course if instability spreads.
And it does appear that unrest will grow, at
least until a definitive outcome is realized as a result of either the
success or failure of protesters’ efforts. That the protests are
erupting in countries with authoritarian and long-entrenched regimes is no
surprise. It is within these countries that the most glaring imbalances exist
in economic wellbeing.
Today we’re seeing the correct reaction
from markets in the face of such widespread insurgency. Oil, gold and silver
are exploding to the upside, while stocks are plummeting as investors seek
real safety in those commodities, and abandon the U.S. dollar for the beat up
piece of spent jet trash that it is.
But not all stocks are plummeting.
The resource-centric TSX and TSX Venture
Exchanges are moving up substantially, as the high prices of precious metals
and hydrocarbons brings increasing attention to publicly traded exploration
and development companies in those sectors.
In the last 5 days, the S&P TSX Index has
risen nearly 100 points. But the TSX Venture exchange has performed even
better, racking up gains of over 71% since July of last year, making it the
best performing stock exchange in the world.
There have been over 100 instances of share
prices doubling on the TSX Venture this year alone, and last year that number
exceeded 400. It is expected that 2011 will actually far outperform 2010
based on the expectation that silver prices will reach as high as $55 per
ounce this year, and gold could go as high as $1,800.
What’s going to push the prices of those
metals so much higher, you wonder?
Well first of all, this apparently piecemeal
revolt leap-frogging from desert country to country
is going to start manifesting itself strongly in less tolerant countries.
Despite China’s swift response to calls for the ‘Jasmine
Revolution’ to get underway there, nothing is likely to breed further
attempts at demonstrations than the ongoing success of revolts in Arab
countries.
The fact of the matter is that this is going
to become a very a broad movement globally to rectify the imbalances among
the poor and rich, and, as seen in Wisconsin, where demonstrating union
members are fighting for their various rights, western countries are not
immune from demonstrations, though the North American variety is not
characterized generally by violence.
There is a risk that the uprisings in the
eastern part of the world could have a unifying effect, however, among groups
formerly limited in effect thanks to their small numbers. The violent protest
in Seattle during the World Economic Forum there is brought to mind. If these
essentially anarchy-minded youth were to collaborate on a global scale with
protesters demonstrating for greater freedoms and economic equality, the
recipe for global destabilization is written.
With so much economic fragility permeating the
system, all the counterfeit quantitative easing that western printing presses
can muster will not be sufficient to confound investors into believing that
stability and growth has returned.
In Obama’s budget, he projects that U.S.
GDP will grow by 5% per year for the next 10 years, underscoring the complete
departure from reality that his administration’s economists have now
embraced. The U.S. economy is not in recovery, quantitative easing, or more
aptly, quantitative counterfeiting, notwithstanding. In order to achieve 5%
per year GDP growth, the U.S. Federal Reserve and their co-conspirators, the
U.S. Treasury, is going to referring to these Quantitative Easing events
numerically, and just refer to them as ‘business as usual’.
At any rate, the last round of CNBC-led
“gold is dead” cheerleading has made fools of those parrots once
again, and we’ll know for certain the gold bull market is over when the
mainstream U.S. financial medial outlets start
proclaiming gold a ‘buy’.
Value is not a tangible object, and so given
the current state of human cerebral evolution, it must be expressed in a
tangible object. Gold fits the bill, and is therefore never likely to form a
bubble, unless considered in the eonic time sense,
in which case human existence itself is just a bubble. It’s all
relative.
But one thing is certain. The only real
winners among investors and savers going forward are going to be investors in
precious, base and energy metals explorers who then preserve their winnings
in precious metals.
MidasLetter Premium Edition identifies 5 stocks on the first
Sunday of each month from the TSX Venture Exchange that are expected to
double within 12 to 18 months, 9 out of 10 times, or your money back.
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James West
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