Syria 2013: Possibly…Déjà vu Desert Storm War

The Gulf War (2 August 1990 – 28 February 1991), code-named Operation Desert Storm was a war waged by a U.N.-authorized coalition force from 34 nations led by the United States, against Iraq in response to Iraq's invasion of Kuwait’s oilfields   http://en.wikipedia.org/wiki/Gulf_War 

Under the brilliant command of U.S. General Schwarzkopf, Desert Storm was a relatively short war…but with material short-term price fluctuations  for Gold, Crude Oil, the US Dollar Index, the XAU Index and the Dow Stock Index.

GOLD

Geo-political conflict and saber rattling threats in the Middle-East began and accelerated in early 1990. Consequently, commodity prices began moving before the first shot was fired.  Specifically,  the price of gold anticipated the beginning of the Desert Storm War by soaring nearly 21% in the tense period leading up to the actual start of hostilities. The shiny yellow rose for $350 to $423/oz in only 8 weeks leading up to the war in August 1990. However, once the war broke out, gold promptly dropped -14% as hostilities waged. Perhaps speculators expected a short war, and consequently took profits.

CRUDE OIL

Correspondingly, the price of crude oil began rising in early July.  However,  crude oil went ballistic in August when the war actually began.  And during Desert Storm hostilities, crude oil went parabolically up 150% from $16 to $40 per barrel as the offensive progressed…and fears rose Middle-East oil production would be shutdown.  However, by October it became obvious the Iraq forces would be defeated – and so crude oil prices began tumbling.

US DOLLAR INDEX

Surprisingly,  the Desert Storm War had a negative impact on the US$ Index -- as it anomalously fell -12% from 93 to 82 during the period. But once the hostilities ended in February 1991, the US greenback roared upward by +17% in only 8 weeks.

XAU INDEX

To be sure the Desert Storm War had an adverse effect upon the precious metals stock index XAU, which fell -36% in less than 4 months (August to December as Desert Storm War raged).


 

DOW STOCK INDEX

UNDERSTANDABLY the exploding geo-political uncertainties caused the DOW to plummet -21% in the first months of the Desert Storm War.



Therefore, if a Syrian war materializes, and there are 1990-1991 déjà vu results, the DOW Index might be hammered down to support at 12500.




GLOBAL IMPORTANCE OF SYRIA

Dr Jim Willie accurately describes the eminent importance of Syria:

WHAT SYRIA MEANS

Syria stands at the door to the emergence of the Eastern Alliance, the new dominant energy pipelines, a new payment system detached from the USDollar and Anglo banks. Syria stands at the door which controls some incremental European energy supply. Syria stands at the door to Gold Trade Settlement, with a transition step that brings more importance to commodity backed currencies and proper valid systems for trade. Syria means the pipelines strangle the USDollar. Syria means the end of the US system of IOU coupons that pollute the global banking system. Syria means the status quo is coming to an abrupt end. Syria represents a clash of East versus West, which has more commercial and bank significance than anything reported by the lapdog press. Notice the direct line from Iran through Iraq to Syria. The natgas of Iran reaches the Mediterranean Sea through Syria.

( https://www.gold-eagle.com/article/syria-pipeline-politics-opec-usdollar )
 

What To Expect?

Is there probability of war in near future? NO ONE KNOWS FOR SURE!!!  Middle-East countries are split in their opinions.  Even traditional ally England said it will not participate in any hostilities against Syria. To be sure Russia and Iran are vehemently opposed that the US take military action against the Syrian regime.  Only France has agreed to support US action.  But in the event the US Navy’s Tomahawk Missiles rain on Syria,  we might see  Syria 2013: Déjà vu Desert Storm War with all its negative ramifications. 

Possible Forecasts in the event history repeats as hostilities escalate to involve other countries (on both sides):

GOLD

In anticipation of the war’s outbreak, gold popped +21%, but then quickly dropped -14% as hostilities waged. Were history to repeat, the shiny yellow might decline to last July support at $1238.

CRUDE OIL

Another serious armed conflict might catapult oil to well over $200/barrel – as daily supply is jeopardized.

US DOLLAR INDEX

A Desert Storm War déjà vu might see the greenback decline to about 72. However, it should rapidly recoup – once the hostilities end. 

XAU INDEX

During the Desert Storm War, the XAU INDEX was hammered down -36%. And in a possible recurrence, the XAU might drop to 2008 bottom support at 70.

DOW STOCK INDEX

If a Syrian war materializes – and especially if it ESCALATES…and there are 1990-1991 déjà vu consequences, the DOW Index might be hammered down to support at 12500 (see DOW chart above)

BEARS WATCHING.....Literally pun intended!

September 1, 2013

The above analysis is for informational purposes only – and should NOT be considered a recommendation to buy or sell anything. Do your own due diligence, and consult a Registered Representative.