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Updated: 9/28/2006 |
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Probability of a future Air strike against Iran by Israel and or US (Data source: Intrade) |
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Probability of an attack by December 2006 |
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Probability of an attack by March 2007 |
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Probability of an attack by December 2007 |
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Gold/Oil Price Chart 10/13/2006 (Gold in Green - Oil in White) |
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A possible attack against Iran by Israel and/or US is one of the major geopolitical risks for the US as well as the Global economy. A strike against the nuclear and military facilities of Iran will definitely cause major oil supply disruptions as well as a stratospheric gold price. Iran's military capabilities of launching a counterstrike are rather limited in terms of major military actions, but it is possible for them to launch rocket attacks against the Green Zone in Baghdad, targets in Israel and, more importantly, against the oilfields of Iraq, Saudi Arabia, Kuwait, Oman and the Emirates. It is also possible that Iran will try to destroy one or several oil tankers in the Straits of Hormuz - thus blocking the movement of oil tankers in/out of the Persian gulf. The big unknowns in this situation are the actions of Iran's allies - Russia and China. They will be the major cause of uncertainty of how bad things will unfold. I will leave it to you to imagine what two of these countries are capable of doing...
Anyway, the gold price can easily hit $1000 an ounce. Oil price $100 and up. Stock market is going to decline fast and deep. Obviously, the oil prices and gold prices can also tell us the probability of a coming attack - and both of these indicators have been screaming that the possibility of an attack is increasing.
When Oil and Gold are moving together in the same direction (upwards), it usually means that geopolitical risks are increasing (there is plenty of oil available in the spot market and the price of dollar is not going anywhere).
Look at the chart above and judge for yourself about the possible risks... |
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