Random Musings: Exploring the Nexus of War, Gold, & Commodities

Random Musings

It takes twenty years or more of peace to make a man;
it takes only twenty seconds of war to destroy him.
Baudouin I 1930-1993, King of the Belgians

Random Musings: War, Gold, and Commodities

Updated July 2023

We will delve into this topic from a historical perspective for two important reasons: Firstly, those who fail to learn from history are destined to repeat it. Secondly, it provides a real-time insight into our past actions.

We have sat quietly, waited and watched, hoping someone out there would pay attention and make people understand the implications of what Osama Bin Laden said last year in October. The news media played the story once or twice, but no one seemed to take the time to analyse the significance of his statements and their long-term implications. (We will slowly tie this article into several different investing concepts).

Osama bin Laden claimed that he and his guerrilla forces had drained Russia’s resources and pushed them towards bankruptcy during their occupation of Afghanistan, ultimately leading to their withdrawal. He stated that they had employed the same strategy against the United States. The September 11th attack cost them around 500,000 dollars, but the economic toll on America exceeded 450 billion dollars. For a detailed breakdown of the costs associated with the 9/11 attack, click on the following link. Link.

Simple math will reveal that we lost almost a million dollars for every dollar they spent. Stop to let this sink in for a second; the ratio of what they spent to what we lost is mind-boggling. They could bankrupt a country by simply maintaining this cost ratio. That is exactly what Bin Laden and his followers are currently doing. A shoulder-fired stinger missile costs about 50-60,000 dollars, yet it can be used to bring down a multi-million dollar helicopter. In addition, unlike the US army, which is currently stretched thin, Bin Laden seems to have no problem recruiting new candidates.

 Financial Implications and Terrifying Realities: The Cost of War and the Never-Ending Battle in Iraq

The above situation is scary enough when one views the financial implications, but when we add Iraq, the picture becomes terrifying. Just look at the cost of this war alone; we have already gone through over 100 billion, and the US has requested another 100-200 billion (this figure will keep getting higher) just for this year only.

Jan. 13 (Bloomberg) – The Pentagon comptroller’s office said today that the U.S. spent $102 billion through Sept. 30 on the invasion and occupation of Iraq, with costs averaging $4.8 billion a month. “It does not necessarily reflect the true costs of the operations in Iraq,” Kosiak said. “We may have some significant bills yet to be paid for replacing some equipment worn out by these operations.” [See]

Conservative estimates have this war lasting anywhere from 5-10 years, costing the US 100 billion annually. Then this war could cost us an additional one trillion dollars (and we are being conservative here). The reality is that this war is never going to end because the enemy is not fixed; he cannot be seen, and so it’s a game of hide and seek where the seekers pay in the millions to find the hiders who can be easily replaced at the cost of a few thousand dollars.

Imposing Our Way of Life: A Key War Failure

One of the main reasons this war will fail is because we are trying to bring and forcefully implement our way of life in the Middle East. Even before this war began, we stated that it would cost several times more than the official estimates and last 10 times longer than their wildest estimates.

“Our armies do come into your cities and land as conquerors or enemies but as liberators.” Who do you think made this statement? You are entirely wrong if you think it was one of the prominent US generals or George Bush. It was a British General named Fredrick Maude in March 1917. Subsequently, they captured all the oil fields.

They massacred thousands of Iraqis and established a so-called Democracy (to the Iraqi people, it must have looked more like a dictatorship, as founding one on blood is hardly the right way to proceed). Fast forward, our closest allies today are none other than the British and many Iraqis have not forgotten what took place, so it’s no wonder they are sceptical of our intentions. This also is one of the main reasons why so much antagonism is directed towards the US.

The Meaning of Islam: Peace, Submission, and the Path to Truth, Peace, and Justice

The term “ISLAM” originates from the Arabic words “salaam,” signifying peace, and “taslim,” representing submission. A follower of Islam is called a Muslim, which, when translated to English, means “the one with peace.” However, for Muslims, it carries a deeper significance. They believe that genuine peace can be attained by recognizing, obeying, and worshiping the Creator, thereby submitting to the One God. Hence, to a Muslim, being a Muslim implies being someone who willingly submits to the divine in a state of peace.”.

According to Muslims, Islam is the way of God and the religion of all the prophets, from Adam to the final prophet of God, Muhammad (peace be upon them all). The Prophet Moses (peace be upon him) said to his people, “Shalom I bring to you”.

Shalom in Hebrew means Salaam (Arabic). The Prophet Jesus (peace be upon him) said to the people;

To become a Muslim, one must declare, “There is No God but Allah, and Muhammad is His servant and messenger.

This is known as the Shahada or the bearing of witness. The message of Islam is:

  1. Truth
    2. Peace
    3. Justice


The Clash: Democracy vs Islam – Conflicting Views on God’s Will and Man-Made Laws

I spoke to a few non-radical Muslims who respect all other religions and have no desire to impose their views on anyone to verify if the above information was accurate. They all agreed that, more or less, it was a fair representation.

So, in essence, Islam means submitting to God’s will and that God’s law overrules any other law. Since democracy is essentially the will of the masses (the majority wins), the people decide what is right or wrong. This leads to direct conflict with Islam, and by now, we all know that to a true Muslim, God’s will is supreme and must be obeyed above all. This debate has not been resolved amongst Muslims; should they always follow God’s will even though it might conflict with some rules and regulations set by men? Muslims with little exposure to the West say God’s will is supreme.

Democracy and Islam: Clash of Perspectives in the Middle East

Muslims who are more Westernised generally lean towards democracy. However, we all know that most Muslims in the Middle East have very little exposure to Western culture; hence, democracy is not well received by most. So, democracy, by its nature, could be said to be in direct conflict with Islam, and that is why perhaps there has never been a democratic state or nation in the Middle East. The radical Muslims will take advantage of this possible loophole to its fullest extent and use it to promote their agenda.

The Clash: Democracy, Intervention, and Covert Operations – Analyzing the Implications and Challenging Assumptions

If you pay attention to the news, the war on terrorism has taken second place to the desire to bring democracy to the Middle East. Hardly a day goes by without the D word (democracy) being mentioned in some news broadcast. Now stop and think about this for a second do we really have the right to tell them what they should do and how they should lead their lives? Think about it this way, how would you feel if suddenly an army of Muslims landed in Pennsylvania and decided to force Islamic law onto everyone in that state? Outrage, horror etc., we would be ready to take arms and fight to the very end.

I want to stop here for one second just in case some of you get the wrong idea and think that we are taking sides; we are not. We are trying to take a cross-cultural analytical look at the situation. What most individuals do is that they take a subjective monocultural look at any given situation and then make a decision based on inaccurate and warped data.

The Troublesome Situation: Covert Operations and Iran’s Nuclear Facilities

We are spending so much time on this problem so that you can understand what a big mess we are in now and how this mess will change the lifestyle of many Americans over the next few years.

To make matters worse, we are now conducting covert operations in Iran, intending to take out most of their nuclear-producing facilities with a few smart bombs. The Pentagon appears to have taken control of the CIA and can engage in covert operations without letting Congress know. Seymor Hersh of the New Yorker has written a lengthy article. The fact that the Pentagon took the time to respond to this article shows there must be some truth. [See]

Random Musings: War Costs and Dollar Decline: The Burden of Multiple Conflicts

While Europe is trying to find a peaceful way to solve this problem, America claims that some measure of force needs to be applied to drive home the point that seeking nuclear capability is not in Iran’s best interest. The question comes down to this: how many wars can we fight? We are already a debtor nation, and the only way to pay for these wars is to print more dollars; sooner or later, the world will get tired of getting paid in dollars that keep losing their value at the speed of light. Wars are an expensive business, and already we are involved in two wars, both of which we have no chance of winning because we are fighting an unseen enemy. One was enough to bring the great nation of Russia to its knees, and we are still looking for new wars.

Never before in History has the dollar lost value so fast. (by the way, this dollar rally we have been talking about is just a short to intermediate-term play, the dollar is dead)

Let’s look at the dollar versus hard assets since 2001 (from their lows to their highs)

  • Raw materials are up over 100%
  • Gold up over 65%
  • Silver up over 100%
  • Platinum is up over 85%
  • Copper is up over 100%
  • Coffee is up over 120%
  • Soybeans are up over 110%
  • Palladium is down almost 90% (we just decided to throw this in to show the enormous discrepancy and how it’s an excellent buy)

Random Musings-Conclusion

During World War II, raw materials soared up by over 400%. If we adjust for inflation, natural materials have the potential to go up by several thousand percentage points this time around. We are also not fighting one war but two wars right now, and at the rate we are going, there is an extreme likelihood that we will be engaging in a third one in the not-too-distant future. If we ever attack Iran, the number of terrorist attacks will skyrocket. Iran has long-range missiles and strong ties with Hezbollah, and an attack on Iran would undoubtedly make these chaps see pure red for a long time, and no one knows how they would react.

Thank God we have not witnessed any suicide bombing acts in the US yet, but such an attack on Iran could lead to such an event. This would have incalculable effects on the American Psyche, not to mention the huge economic cost. The Europeans have been trying to negotiate with Iran but have openly stated that these negotiations are bound to fail if the United States does not participate.

Stalemate in Iranian Nuclear Negotiations: Military Threat versus Diplomatic Solutions

European nations have urged the Bush Administration to participate in negotiations, but the Administration has adamantly refused. The Pentagon’s civilian leadership argues that diplomatic progress regarding the Iranian nuclear threat is unlikely unless there is a credible military threat. A senior International Atomic Energy Agency (I.A.E.A.) official shared that the neoconservatives view negotiations unfavourably, believing that pressure and force are the only languages Iran understands.

The alternative option would involve taking the matter to the Security Council, but the possibility of China or Russia vetoing any sanctions resolution is high. Consequently, the blame might fall on the United Nations, leading the Americans to consider bombing the sole solution.

We suggest again that you read the full article from the New Yorker by clicking on the above link. The above statements, if true are very strong and will only promote more distrust and hatred in the Middle East.

Diversify Your Assets: Protecting Your Finances in Uncertain Times

These wars will have a severe effect on most Americans’ lives. We are now at a turning point; there is no doubt that the dollar is dead long term, and now is the time to slowly start moving some of your assets out of this country. We are not talking about fleeing but just using our grandparents’ principle of never putting all our eggs in one basket. You can still have overseas accounts denominated in dollars to take advantage of the current dollar rally.

After that, you can switch them to a stronger currency. You can also use these accounts to own Gold, Silver, Palladium, energy stocks etc. We envision foreign solid currency controls being implemented in the US, and money movement outside the country will be heavily restricted. For US citizens, Canada is a good choice; it’s close and very stable.

There is nothing illegal about moving your money overseas as long as you fill in all the paperwork. You can take more than 10k out of the country in the form of Gold bullion or some other precious metal, but once again, as long as you fill in the appropriate paperwork, it’s entirely legal.

Implications of these wars

We will only put up a partial list of these implications, as the rest are reserved for our subscribers.

 Urban vs Rural Real Estate: Contrasting Fortunes in Uncertain Times

Real estate in the big cities will take a big hit and tank. Surprisingly though rural real estate might thrive, perhaps one of the reasons could be the safety factor.

 Swiss Franc and New Zealand Dollar: Potential Safe-Haven Currencies on the Rise

The Swiss franc will become much more robust in the future. Switzerland is a neutral nation (they have not had a significant war for several decades); we believe it’s possible to see when it will take 2 dollars to buy a Swiss franc. Another neutral Nation is New Zealand. The time to take positions in these currencies is after this dollar rally.

 Long-Term Outlook: Oil Prices Could Soar to $300 per Barrel

Oil could trade as high as 300 dollars a barrel. Sometime last year, we had initially put a price of 100 dollars a barrel, but then we stated that recent developments pointed to much higher prices and kept worsening.

All these prices we are putting up are very long-term price targets, a minimum time frame of 3 years to a maximum of 10 years)

I hate war as only a soldier who has lived it can,
only as one who has seen its brutality, futility, and stupidity.
Dwight D. Eisenhower 1890-1969, Thirty-fourth President of the USA

Originally Published In April 2005. Last July  2023

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