Although many have predicted over the past five years that Iran would be at war with the west or Israel, such an outcome has not developed. We seldom comment on war preparation activities and have not done so recently, and although it is not our normal modus operandi, we would like to point out that currently many signs point to the potential for hostility with Iran to develop. Please note the following points.

1. Iran is becoming more isolated.
2. Russia has stated that they believe Iran may be close having a nuclear weapon. Many believe that they may already have developed nuclear weapons. It appears that Russia is starting to moderate their view on Iran to a view more similar to that of the western powers.
3. Iran’s friends in the Arab world, who have helped them in many ways, are starting to move a way from them.
4. Iran has sold much of the oil they had stored in tankers offshore. It occurs to us that they maybe raising cash for an expected war.
5. We have noticed several countries buying gold, and a few are selling gold and/or borrowing against their gold holdings. We do not know if Iran is engaged in this activity but if they are expecting war, they are undoubtedly trying to raise cash in order to support that effort.
6. We notice that Prime Minister Netanyahu and President Obama had a cordial conversation at the White House and Obama has recently expressed more support for Israel.

Could it be that we are approaching a war between Iran and Israel and/or the west, with the U.S. supporting Israel and Russia demanding concessions for not intervening? Although we are not political analysts, and we do not know that war is in any way an eventuality, we believe that it is a possibility.

Should a war develop in this oil producing region, fears that it could spread would likely send oil and gold prices much higher. Should a war develop, the stocks of oil companies that produce oil in Canada and other politically safe locations would be in demand.


The most recent meeting of the U.S. Federal Reserve Open Market Committee was somber. Most members cut their outlook for growth and raised their outlook for unemployment.

The major take away was that the U.S. economy will take a long time to recover and will grow slowly. We have known this for some time, but the confirmation by the Fed’s economists is sure to drive the point home.

Here is a quote from the minutes of the meeting. “Overall, participants continued to expect the pace of the economic recovery to be held back by a number of factors, including household and business uncertainty, persistent weakness in real estate markets, only gradual improvement in labor market conditions, waning fiscal stimulus, and slow easing of credit conditions in the banking sector.”

Translation: slow growth ahead. For more information please click on this article from the Wall Street Journal of July 14, 2010 entitled Fed Sees Slower Growth by Jon Hilsenrath. It can be found at:

As we stated last week, growth will be strong in China, India, Brazil, and selected well managed countries like Germany, Canada, and Singapore. If war develops in Iran gold and oil will get particular attention, however, even without war in Iran, both still are attractive long term in our opinion.

Thanks for listening.

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