Syrian War Explainer

29 Nov

If you are someone like me, who are interested in geo politics and global wars, this can be an informational post. If you have already read much on Syrian war but missed out the gas pipeline factor, this will make sense. It seems most of the Middle East civil wars are just the outcome of crossfires between US and Russia. I had amazing insight reading it. Hope you have the same.

Is the fight over a gas pipeline fuelling the world’s bloodiest conflict?

IT’S buried more than three kilometres underground, but it could be the key to finally ending the world’s deadliest conflict.

THE Syrian war often seems like a big confusing mess but one factor that is not often mentioned could be the key to unlocking the conflict.

Some experts have pointed out that many of the key players have one thing in common: a billion-dollar gas pipeline.

Factor in this detail and suddenly the war begins to make more sense, here’s how it works:

IT’S THE GAS, STUPID

Many have questioned why Russia became involved in the Syrian war but often overlook the fight over natural gas.

As Harvard Professor Mitchell A Orenstein and George Romer wrote last month in Foreign Affairs, Russia currently supplies Europe with a quarter of the gas it uses for heating, cooking, fuel and other activities.

In fact 80 per cent of the gas that Russian state-controlled company Gazprom produces is sold to Europe, so maintaining this crucial market is very important.

But Europe doesn’t like being so reliant on Russia for fuel and has been trying to reduce its dependence. It’s a move that is supported by the United States as it would weaken Russian influence over Europe.

This has not gone down well with Russia, which uses its power over gas as political leverage and has a history of cutting off supply to countries during conflicts. It has even gone to war in Georgia and Ukraine to disrupt plans to export gas from other parts of the Middle East.

As David Dalton, the editor of the Economist Intelligence Unit, told The New York Times: “Russia has always used gas as an instrument of influence. The more you owe Gazprom, the more they think they can turn the screws.”

Much of Russia’s power comes from established pipelines used to transport gas to Europe cheaply. But other countries are now trying to get around Russia and provide new sources of gas to Europe.

Last year US President Barack Obama spoke openly about the need for Europe to reduce its reliance on Russian gas following the conflict in Ukraine.

The US also wants to use its own natural gas supply, recently developed through fracking, to undercut Russian supply. But it will be years before the US will be in a position to ship this overseas.

The US is not the only country trying to outmanoeuvre Russia, and this is where the role of Syria becomes more important.

TWO NEW PIPELINES

Before the civil war, two competing pipelines put forward by Qatar and Iran aimed to transport gas to Europe through Syria.

Qatar’s plans were first put forward in 2009 and involved building a pipeline from the Persian Gulf via Saudi Arabia, Jordan, Syria and Turkey.

The gas field located 3000 metres below the floor of the Persian Gulf is the largest natural gas field in the world. Qatar owns about two-thirds of the resource but can’t capitalise on it fully because it relies on tankers to deliver it to other countries and this makes its gas more expensive than Russia’s.

It was hoped the pipeline would provide cheaper access to Europe but Syrian President Bashar al Assad refused to give permission for the pipeline to go through his territory. Some believe Russia pressured him to reject the pipeline to safeguard its own business.

The proposed gas pipeline from Qatar via Saudi Arabia, Jordan, Syria and Turkey to Europe.

The proposed gas pipeline from Qatar via Saudi Arabia, Jordan, Syria and Turkey to Europe.Source:Supplied

In the meantime Iran, which owns the other smaller, share of the Persian Gulf gas field, decided to lodge its own rival plan for a $10 billion pipeline to Europe via Iraq and Syria and then under the Mediterranean Sea.

Pipeline from Iran via Iraq and Syria to Europe.

Pipeline from Iran via Iraq and Syria to Europe.Source:Supplied

These plans apparently had Russia’s blessing, possibly because it could exert more influence over Iran, which, unlike Qatar, did not host a US air base.

Assad signed off on the Iran plan in 2012 and it was due to be completed in 2016 but it was ultimately delayed because of the Arab Spring and the civil war.

Many countries supporting or opposing the war against Assad have links to these pipeline plans.

Failed pipeline bidder Qatar is believed to have funded anti-Assad rebel groups by $3 billion between 2011 and 2013. Saudi Arabia has also been accused of funding the terrorist group.

In contrast Orenstein and Romer noted the successful pipeline bidder, Iran, was believed to be helping Assad by running the Syrian army, supplying it with weapons and even troops.

Major Rob Taylor, an instructor at the US Army’s Command and General Staff College wrote in the Armed Forces Journal last year that the rival pipelines could be influencing the conflict in Syria.

“Viewed through a geopolitical and economic lens, the conflict in Syria is not a civil war, but the result of larger international players positioning themselves on the geopolitical chessboard in preparation for the opening of the pipeline,” he noted.

Just as the 2003 Iraq War has been linked to oil in the Persian Gulf, Syria may turn out to be all about gas.

WHY DOES TURKEY CARE?

One of the countries that has a lot to gain from getting rid of Assad is Turkey.

Turkish President Recep Tayyip Erdogan has been vocal in calling for the Syrian President to step down and has also been accused of helping Islamic State, something it has rejected.

While Turkey could have other reasons for supporting the rebels in Syria, such as Assad’s support for the Kurds, Harvard University Professor Orenstein told news.com.au that gas would definitely be one reason it was opposing the regime.

Turkey, which stands at the crossroads of Asia and Europe, is an aspiring member of the European Union, and some consider it to be the best option for facilitating the movement of gas supplies from the Middle East to Europe.

As a hub, Turkey would benefit from transit fees and other energy-generated revenues.

It could also insure, with US support, that all gas suppliers in the Middle East could freely export their product.

Qatar’s plans put Turkey at the centre of its plan.

As one of the countries relying on Russia for gas, freeing it from this dependence would be an added bonus.

But none of this can be realised if the pipeline bypasses Turkey and if Assad becomes instrumental in approving an alternative that does not involve it.

Now that Russia is stepping in to help the Assad regime in Syria — possibly to protect its own dominance in the gas market — Turkey is facing a formidable barrier to its aspirations.

When Turkey downed a Russian plane earlier this month, some speculated it may want to weaken any potential co-operation between Russia and the US which could see Assad continue his leadership.

Russia’s motives for its air strikes have also been questioned. CNN military analyst Cedric Leighton, a retired air force colonel, noting that its bombing of Islamic State extremists seemed to have hit Turkmen in northern Syria, who had strong ties to the Turkish government.

Prof Orenstein said the competition over natural gas could ultimately prevent co-operation between the two world powers on fighting Islamic State.

“I doubt there is much basis for US-Russia co-operation due to opposite interests in gas issues and Iran,” he told news.com.au

But despite fears that the world is facing a new Cold War, Prof Orenstein believes it’s more of a “free for all”, with the fight over natural gas acting as just another fuel.

(Source : news.com.au)

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Cryptocurrencies & the Scam

27 Oct

There is a serious new fraud centering around Cryptocurrencies. There have been some trading platforms set up that are suddenly changing the rules in mid-game. People who have tried to sell things like Monaco Card etc. on these platforms have discovered that their accounts are frozen because they do not have the money to pay people. The excuse is they need to now suddenly PROVEwho they are to liquidate anything. The requirements are onerous and simply a DELAY tactic. These platforms maybe a FRAUD and should be reported to the SEC.

There was a company IGBE (International Gold Bullion Exchange) back in the early 1980s. They were offering selling gold bullion coins at the spot, which was below cost, but the catch was 90-day deferred delivery. They were actually not booking the gold and expected it to continue to decline. When gold rallied, they were not covered and could not deliver. They were taken off to jail and investors lost I believe $100 million+.

Cryptocurrencies are no different from any other investment product. It is a misrepresentation that they offer an alternative to the dollar. No matter how much money one made on Bitcoin, they still have to sell it to realize that profit and how are they measuring that profit? In dollars of course.

Beware of the fraud in these trading platforms that are now suddenly freezing people’s accounts claiming security to prevent people from selling particularly the smaller new cryptocurrencies.

Source : armstrongeconomics.com

End of market – When fool who rushes at the last minute

26 Oct

The recent report by the Commodity Futures Trading Commission (CFTC), shows that the professional investors have continued to bet on falling Dow Jones “short” as private investors are starting to bet heavily on rising prices ( “Long”). Professional investors remain suspicious of a further rise in the US stock market. The private investors’ view is exactly the opposite. The question is; Who will be right?

There have been plenty of times that the professional is dead wrong and the average person on the street has actually outperformed the professionals. Reuters reported that 69% of hedge fund investors expected the second half of 2017 to be worse than the first half. So why are the professionals so pessimistic?

When you live and breath the market every single day, it is hard to get a grip on vertical markets. The professionals, more so that even the average street investor, tends to do worse in such markets because it makes them uncomfortable. Then there is the self-gratifying notion that the market is over when the retail invest comes in. But they tend not to look at the fact that there is a huge difference between the average retail investor and the person who has never invested who rushes in to join the party at the top simply be everybody else if there.

I have told the story before how I was doing an institutional only seminar in Tokyo at the Imperial Hotel. This individual bribed someone in the hotel to get in. He came up to me and apologized offering to pay. He said he just had to speak to me. I asked him what was the problem, He explained he had bought the Japanese share market on the very day of the high and now it was crashing. His investment was $50 million. But the intrigue came when he said it was the first time in his life he had purchased any stock. He then had my attention since I was talking to the guy who bought the high.

I asked him what made him buy that day for the first time in his life? He said brokers had called him every year saying the Nikkei rallied on average 5% every January with the New Year. He watched it for 7 years and then finally bought the high. That is what I mean as the difference between the average retail investor and the fool who rushes in at the end because everybody else is there. It is when that final group of people rush in that marks the end of the market – not when simply average investors buy who follow the market generally.

We have four actual groups:

  1. smart strategic big money (long-term portfolios)
  2. professional short-term traders
  3. the day trader who thinks he is limiting his risks
  4. program traders who try to arbitrage ticks
  5. the average retail investor
  6. the fool who rushes in at the last minute

In most real good vertical markets, it is the professional short-term traders who keep trying to sell the new highs. This has been the group that has been bearish ever since 2009. They never saw new highs coming, and they still will try to sell every new high today. They falsely believe that they are “professional” and so they will be right and the average investor is the fool. But the average investor sees the trend for what it is, goes with the trend, while the short-term “professional” keeps trying to beat the market.

Usually, the day trader who thinks he is limiting his risks and the program traders who try to arbitrage ticks will typically get caught when they suddenly find the lack of liquidity traps than in a position they cannot get out of.

Source : armstrongeconomics.com 

How to Play the Odds in the Crypto Casino – Bitcoin

18 Sep

We’re living in the crypto casino now. The total value of cryptos fell 11% over the weekend. This wiped off billions in the valuations of all of them.

Why? Who knows. Maybe traders ran a big sell program to shake out the weak holders so they can buy them back cheap.

Maybe it’s the end of a massive bull run.

I think it’s a dip. News just keeps coming in to suck more people into these markets.

Already, two tokens — issued via an ‘initial coin offering’ (ICO) this year — have hit US$1 billion valuations. These two coins only began life in March and July 2017.

Both were issued at a price under $1 and now trade over $10 — despite neither of the companies behind them having a product to sell as of now.

These sorts of speculative gains in the crypto markets dwarf anything else on offer.

Total token sales for 2017 have eclipsed US$1.2 billion. This has surpassed the money that venture capital firms have raised for startups.

Some people say it’s a bubble now. I think this could keep running up and away for a long while yet.

Here are some clues as to why: Hedge funds are launching to invest and trade in cryptos. One reason is that bitcoin, for one, has no correlation to global stocks, commodities and traditional currencies.

Then we can add high share prices, low bond yields, inflated property, and the sheer amount of cash looking for a home.

One precious metals dealer in Australia is now dealing in trading and storing bitcoin.

Apparently, the surprise for these guys is the demand from self-managed super funds. These investors like it as a way to diversify, too.

You might thinks it’s all crazy. But the blockchain technology underpinning this new market is extremely compelling and could change a lot.

Just ask ASIC Chairman Greg Medcraft…

Why share trading looks archaic now

He’s cited in The Australian Financial Review today as saying regular bank accounts might become redundant. That’s if we all keep our money with the central bank and use an RBA digital currency.

This could ‘disaggregate’ the basic banking business model of using deposits as a cheap source of funding.

He may very well be right. But the banks aren’t sitting still on this.

Reuters reported last week that six big international banks have joined forces to create a new digital cash to settle financial transactions over the blockchain. They hope to launch it next year.

This could cut costs for the banks and reduce the amount of capital they need to hold against clearing trades.

And blockchain is coming for the commodity markets. The first one will probably be gold. This could take demand away from ETFs and future markets.

The gold will be stored in a vault somewhere, but traded and settled over a specific blockchain.

Speed is the key here. We’re talking instantaneous settlements.

This is beginning to make regular share trading look archaic. I mean, it takes two days for the ASX to fully clear a share transaction.

Cryptos trade 24/7, and worldwide, too. When you buy them, they appear in your account almost instantly.

Clue for the crypto markets might be here

Here’s another way we can look at this market, and maybe add some sort of indicator as a guide.

It’s all too new to be sure of anything.

But a company called AMD makes GPU chips. These are used (among many things) in the ‘mining’ process for cryptocurrencies like bitcoin and Ethereum.

AMD released a new chip last week and sold out in minutes.

Here’s why. Bitcoin miners, for example, are rewared with new units for each new block created. This involves solving complicated maths problems. Whichever miner does this first gets the bitcoin reward as a payoff.

This means crypto mining relies on raw computing power in a big way. The mining process underpinnng these networks is designed to get harder over time. So the incentive is fixed to always have the best and latest tech driving the mining.

You would think any systematic weakness in the crypto market would show up in chip sales. As of now, they look strong. Other companies are cashing in on this too. AMD is not alone.

As I say, this is just something to watch and see how it plays out. The most compelling thing about cryptos is that they are truly global. The potential demand is enormous. Access is easy, for almost everyone. That may change if some governments step in and attempt to put limits down, as China is rumoured to be doing.

But you have to be following what’s happening here. I still like the idea of having some modest percentage exposure to the main players, bitcoin and ether. Keep your position size small to ride out the volatlity.

Explore the rest of the cryptos for a potential punt on a big payoff.

 

Source : Callum Newman (Editor, The Daily Reckoning Australia)

September 4, 2017

The gold swing

2 Sep

In 2013, Gold slumped by 28% due to equity surge and Fed’s diminishing pace of monetary stimulus. However, gold rebounded by 7.3% in 2014 as a result of geopolitical tensions prevailing in Middle East, East Europe and Iraq. After beating gains of other investment asset like commodities, equities and treasuries, it is again back to its status of being less favored by investors.

Gold price has remained confined in a small range due to lack of conviction in the yellow metal as hedge funds and money manager lower their bullish bets in gold by 24,182 contracts, to 92,734, the lowest since June as reported by CFTC.  US and Canada markets are closed on account of Labor Day holidays hinting the low market participant volumes.

The U.S. economy grew more than forecast in the second quarter, government data showed Aug. 28. Orders for durable goods jumped in July while consumer confidence climbed in August. The volumes of the SPDR Gold Trust holdings, the biggest ETP backed by the precious metal, plunged three times in last four weeks which also show continued lack of interest in the precious metals as investor opt for US equities that is marching to a fresh record.

Better US data shows continuing US economy’s recovery that could prompt FED to increase rates in near future. Higher interest rates can make gold a lesser attractive investment option against treasury.

However the lowering tensions between Russia and Ukraine have escalated with hundreds of Russian soldiers entering Ukraine and Ukraine blaming Russia for launching a fresh military attack across its eastern border.  US is working closely with EU to keep their Russian sanction programs in place. This may generate fresh investor interest in gold for a hedge against political instability.

Thus, gold prices seem to remain range bound with upper side capped by the further march of US equities to a record high while the lower side restricted by the falling Treasury yields. However the unresolved Russia – Ukraine geopolitical tension and coming Indian Festive season can play an important role to lift the gold price.

Warren Buffett And The Chinese Are Loading Up On Hard Assets

20 Aug

Money is transitory and wealth is permanent. So, a lot of people confuse money and wealth and say well, I have a lot of money so I’m wealthy. Well, in the short run, that may be true but in the longer run, the money can go away but the wealth is something that prevails.

You look at Warren Buffett. In the last several years, Warren Buffett went out and bought the Burlington Northern and Santa Fe Railroad. He didn’t just buy some stock, he bought the whole thing, took it private.

What is a railroad? A railroad is nothing but hard assets. It’s right of way, mining rights adjacent to the right of way, rail, rolling stock, yards, switches, signals, buildings, it’s all hard assets. How does the railroad make money? It makes money by moving hard assets so coal, wheat, corn, steel, other kinds of freight, etc. So, railroad is the ultimate, its hard assets moving hard assets. It’s the ultimate hard asset play. Warren Buffett’s next deal was to go out and buy massive natural resources in oil and natural gas. And by the way, he can move his oil on his railroad. He doesn’t need the Keystone Pipeline. You line up a hundred tanker cars, that’s a pipeline on wheels.

So, Warren Buffett comes with his own railroad. That means he has his own pipeline. So, Warren Buffett’s a guy who’s dumping paper money, getting into hard assets in the form of transportation and energy in particular. And the dollar could go to zero and it has no effect on him. He still owns a railroad

The other example are the Chinese. The Chinese have spent the last four years acquiring approximately 3,000 to 4,000 tons of gold. Now, how do we know that? We have some hard data. We know China’s mining output is about 450 tons a year. We know China’s imports through Hong Kong are coming in between 800 and 1,000 tons a year. This has been going on for four years so that’s kinda 6,000 tons there and where you have to use a little guesswork is okay, we know how much gold China is getting, how much is going to private consumption, how much is going to the government? We’re not as clear on that, but I use kinda half as the first approximation.

And we also know that China is acquiring gold through stealth using intelligence and military assets to bring gold in completely off the books, doesn’t show up in Hong Kong imports. So, why is China doing this? Well, because they got a mountain of paper assets. They’ve got $4 trillion in reserves, almost all of it denominated in paper bonds. Most of that U.S. dollars, most of that U.S. treasury so, you know, the oldest joke in banking is if I owe you a million dollars I have a problem, but if I owe you a billion dollars, you have a problem because you have to collect it from me and I can walk away.

Well, we owe China $4 trillion so China has a problem. So, they can’t dump those paper assets. They know that. Their treasury markets big, but it’s not that big. It can’t absorb those kinda sales. So, what China’s doing, they’re vulnerable in the paper. If we have inflation, that’s just a wealth transfer from them to us so they’re acquiring gold, thousands of tons of gold. By the way, there are only about 33,000 tons of official gold in the world. All the central banks, sovereign wealth funds and treasuries and finance ministries combined have about 33,000 tons of gold.

China’s acquired 10 percent of all of the official gold in the world in the last four years. So, why are they doing that? Well, they now have a hedge position. So, they actually want a strong dollar because they own so much dollars denominated paper. If the dollar is strong, they might not make very much on the gold, but they’ll collect the value of their bonds, but if we inflate the dollar, which we’re trying to do, and the value of those bonds goes down in real terms, we know what’s gonna happen.

The gold is gonna go up like this so they’ve created a hedge where they win this way and they win this way so I would say look at China buying gold, look at Warren Buffett buying hard assets in energy and that will give some guidance. The two other ones, powerful, biggest, best and foreign investors in the world are getting out of paper money into hard assets.

(Article by James G. Rickards)

Jim Rogers: I Missed the Boat on Investing in Bitcoin

29 May

Investor Jim Rogers, of Rogers Holdings fame, has said he missed the boat on investing in bitcoin.

In a recent interview with China Money Network, the veteran investor said he still does not know much about digital currencies, but he admitted that he should have got on board a long time ago:

“If I were smart, I would have bought it in the early days when people first told me about it. I still don’t know enough about it to invest in it.”

Future of money?

Rogers said there have always been great investments around the world, so he was not focused on digital currencies in the past. Furthermore, it all seemed too complicated at the time, he said.

He indicated that he might invest in digital currencies in the future, provided he learns enough about them.

When asked whether or not digital currencies like bitcoin have a future, Rogers said the world has serious currency needs and serious problems, but, he is not sure whether or not digital currencies are the answer:

“The US dollar has dominated the world for the past 70 to 80 years. […] We need something to compete with the US dollar, and something to replace it eventually. Whether it’s the bitcoins, the RMB or seashells, I have no idea.”

Artificial liquidity

Rogers discussed various economic and geopolitical issues in the interview. His biggest concern in terms of economics, he said, is that all major banks have been “printing huge amounts of money” over the past five or six years.

“It’s the first time in recorded history that we have the Japanese, British, European and Americans all printing money at the same time. So we have this artificial ocean of liquidity, which is making markets do well, but it’s not doing much for the economy worldwide. When it ends, we will all pay a terrible price,” he cautioned.

In spite of ominous developments on the monetary front, Rogers said the geopolitical situation should not be overblown, although he does expect to see bigger conflicts over the next decade.

“Politicians have always made foolish mistakes throughout history. They will make mistakes again, and we will all pay for it,” he said.

(Source : coindesk)