Volume M 9-7, June 16th, 2004
a free supplement of
The Growth Stock Report www.jameswinston.com
Secure your Gold and Oil Positions
Saudi Arabia is on the Brink of Civil War
June 16, 2004
The last thing the United States needs right now is another conflict
in the Mid East to deal with, but unfortunately America's key
ally in that troubled region is showing signs that they are on
the brink of a civil war. With 25% of the world's oil at stake,
our next military mission will likely be in Saudi Arabia.
For the worst possible reasons, the likelihood of oil and gold
dropping much further in price seems highly unlikely. In fact,
it is very possible we could see a sharp price spike.
A couple of weeks ago, Secretary of Defense Donald Rumsfeld told
graduates of the U.S. Military Academy at West Point that the
"declared war on terror is closer to the beginning than
This ominous statement was followed by a speech by President
George W. Bush to Air Force Academy graduates at Colorado Springs,
where he remarked that the war on terrorism will be the "work
Due to the inescapable fact
that the source for terrorism funding and manpower comes mostly
from Saudi Arabia and that Saudi is the major global supplier
for oil, Rumsfeld and Bush could have just as easily said that
securing the Mid East oil fields will be the work of decades.
Today, the biggest political
and economic disaster in the making is taking place in Saudi
Arabia. Increased al-Qaeda terrorist attacks in that country
are a major reason why we are now paying more to fill up our
cars and why inflation is on the rise.
Some energy economists are saying that the cost of a barrel of
oil now has at $10 to $15 premium due to the uncertainty in the
Middle East. In Saudi Arabia, analysts are worried that the ruling
House of Saud are losing control of their homeland security and
are showing signs that they are incapable of protecting their
Increased terrorist activity
is hard for oil analysts to ignore. About 8 weeks ago a truck
bomb blasted a main Saudi police station which was followed by
the May 29th attack at a foreign workers compound in Khobar.
An organization calling itself the al-Qaeda of the Arabian Peninsula
later released statements denouncing members of the Saudi Royal
Family and accusing them of plundering the nation's oil wealth.
You would think that a nation
that controls 25% of the world's oil reserves would be a shining
star for education and development for their people instead of
the home base for terrorist financing and training.
So what happen?
Close examination reveals that
the Saudi Royal Family of some 6,000 princes (women are excluded),
along with favored business buddies like the bin Ladens, absorb
virtually all the billions of oil revenues. Their shallow egos
demand displays of material wealth and power evident by pampered
palace living. One nurse who I know of who worked over there
reported that one Saudi prince who she attended to had gold bars
placed on his bedroom floor to keep his feet cool. And of course
there are the chauffeured limousines, private jets, and western
educations for the royals. This is another classic example of
third world politics where the power elite keep themselves in
luxury while their subjects are kept under strict control.
The Saud Royalty enforces strict
Islamic laws and harsh punishments for the 22 million subjects
under their rule. By our standards, the rule of the law is primeval.
For the worst lawbreakers, public beheadings are still the norm.
To help keep the masses somewhat
happy however, billions of dollars have been doled out to the
under classes. These funds have gone to some positive things
such as schools and mosques however there is a clear money trail
showing that al Qaeda terrorists have also been on the receiving
Clearly, this terrorist financial
support shows there is dissention within the ranks of the Saudi
power elite. The clearest example being Osama bin Laden himself.
A couple of weeks ago, the
House of Saud decided they should crack down on these misappropriated
"charity" organizations that have supported terrorism.
One such foundation called the Al Haramain Islanic Foundation
has dished out about $50 million a year to groups who have links
to terror organizations.
The situation is further complicated
by power struggles within the top ranks of the Royalty. King
Faud has been ill since 1995 and some reports suggest he is near
death. This would leave Prince Abdullah as the defacto leader.
However some within the House of Saud oppose Abdullah. And it
would seem, so do many Saudi citizens.
The British newspaper, The Observer commented that "Anti-government
demonstrations have swept the desert kingdom in the past months
in protest at the pro-American stance of the de facto ruler,
Saudi's minister of interior, Prince Nayef, who is also in charge
of preventing terrorism, has strong support though he seems neutral
toward the extremist element. Perhaps this is why four terrorists
where able to disguise themselves as security forces and enter
the well fortified foreign workers compound at Khobar which killed
22 people. More unbelievable is that the terrorists actually
escaped while being surrounded by hundreds of security forces!
Aside from al Qaeda, much of
the Saudi population are not big fans of the United States either
because of the close ties we have had with Israel and because
we have had a military presence there since the end of the Gulf
Once King Faud dies, the potential
for civil war within Saudi Arabia will be high.
If Prince Nayef decides to
challenge Prince Abdullah, he may have the help of terrorist
supporters. Within Saudi Arabia there is a generation of hard
core religious fanatics who have been brainwashed into believing
they are on a mission to rid the world of non-believers. This
is what one Arab writer has described as the "culture of
death." These are the people who don't think twice about
blowing up innocent people along with themselves.
This isn't a pleasant scenario
however it's very real. More troubling is that if Saudi Arabia's
oilfields ever go offline for too long, the world will go into
a major economic tailspin.
Meanwhile, the targets of choice
for terrorists in Saudi Arabia are the western workers who live
and work there. Alex Standish, the editor of Jane's Intelligence
Digest, said the situation in Saudi Arabia has strong parallels
to the fall of the Shah of Iran who was toppled in 1979. He said
there is a lot of evidence to suggest al Qaeda is gathering strength.
The bombings and assassinations
are having there desired effect as westerners are starting to
leave. If this exodus continues, oil shipments would be severely
impaired. The United States and the rest of the industrial world
are counting on Saudi to increase their oil production, not dial
it back. It should be more then obvious the world will not sit
idly by and wait for the Saudi's to sort out their political
in gold has always been the best insurance policy against the
potential for a major financial and political upheaval. It's
been decades since global economic security has been in such
tenuous position. The logic of owning gold in some form makes
more sense today then ever before in our generation.
Jun 16, 2004
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