The No Debt Ceiling, Middle East Shananigans and Gold’s Clarion Call.

Posted at 2:43 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Did you scratch your head just a little bit at how easy John Boehner rolled over and the debt ceiling got lifted by Congress? "Clarity" it was said, and the "uncertainty" of a debt limit was lifted so all should be OK for another year.  No sequester, no cutting back, no nothing.  That’s right, NO debt limit at all for a year so we (and the markets) should party like it’s 1999 all over again!  Right?

Let me tell you what I think happened and why this deal all of a sudden miraculously appeared pretty much out of nowhere. You do know that it has been recently reported that President Obama has added another stop to his planned European trip next month right? Yes, he plans to meet with King Abdullah of Saudi Arabia (betting on whether he genuflects this time upon meeting or not is up to the odds makers in Las Vegas, but I know how I’m betting) to mend fences.  I would like to add that Egypt’s Al Sisi "meets top Russian officials today to negotiate a $2-billion arms deal that is meant to replace subsiding assistance from old ally Washington."

Do you really have to be a rocket scientist to put this one together? Egypt, one of our longest and few remaining allies in the Middle East, is cutting an arms deal with Russia because of our "waning support." We have hung Israel out to blow in the wind over both Iran and Syria and our President is going to Saudi Arabia to mend fences? Uhmm, maybe Saudi Arabia has summoned our President?  Had you considered before that maybe Saudi Arabia is not our oil supplier (like the guy who fills your tank to stay warm in the winter) but instead is (one of) our bankers? Did we maybe irritate our banker just a little when we did not stand up to Syria and force them into running a gas pipeline through their land?

You do understand that this is exactly what last August and September were all about right? Do you remember?  When all of a sudden Russian ships showed up out of nowhere to call Mr. Obama’s Syrian hand? I wrote about it at the time calling it a chess match and we mistakenly thought it was checkers. Do you see where this is going? Egypt is going to allow the port of Alexandria to the Russian navy along with a very big arms deal, and maybe Saudi Arabia is going to accept currency other than dollars for their oil (and maybe not send quite as much to the energy independent U.S.) while Israel, well, does whatever it is that Israel needs to do in her best interest.

I’ve put out a whole bunch of information and speculation above. This is how I think these pieces are put together. Egypt is now a lost cause and no longer an ally. Neither is Saudi Arabia which is a much bigger deal.  Israel? Well, like I said above, they will do whatever it is that they need to do and rightly so in their best interests.  But what about Russia?  Well, they currently have a few nagging problems in the Ukraine and in Kazakhstan.  I don’t profess to understand the politics there but I have heard that they are claiming U.S. interference and the fanning of societal flames.  Is this something that the U.S. might do or has done before in many different countries, on many different continents? 

Ok, so it’s time to connect the dots. Our President has changed his plans and has "decided" (I believed ‘summoned’ to be the better word) to meet with King Abdullah.  Does Mr. Obama even have cards, much less a hand to negotiate anything?  The Olympics will soon be over and the Russians will then be out in full force courting the U.S. disenchantment that is now the Middle East.  I do not believe that they will stand for the violence in either Kazakhstan or the Ukraine and it doesn’t matter whether we are actually fanning the flames or not, what does matter is that THEY believe we are.

This is all just my opinion but the pieces do fit nicely together don’t they?  We also have something else just now happening; gold is telling us something is happening, could it be that it’s being moved higher in a foreign effort to discredit and or mortally wound us? Could it be that the East (and Russia along with our former allies) are calling our hand in what I’ve termed the final cash call?  Have they seen how we are treating (mistreating) Germany over their gold?  Gold has after nearly a full year gone through its 200 day moving average. It looks up finally on the charts that have been oh so painted.  It is exactly BECAUSE the charts have been painted so beautifully that a breach of the 200 day moving average is very important and is telling us something!  It tells me that they have again lost or are losing control and that MUCH higher prices are coming.  Is gold a signal?  Or is it a symptom? Yes.

I think that all of the above is tied together and that some sort of deal was struck recently in Davos. In my opinion, we know about it which is why the debt limit was eliminated so that we can play internal ponzical chairs to fund the game. I believe that we will need to internally fund because the demand for dollars is about to collapse as the petro put that has supported it for so long is pulled. Much of the above is speculation but, much of it is simply putting the pieces of the puzzle together logically.  Whatever it is, gold rising above its 200 day moving average is saying that something has changed. Maybe it’s financial or maybe it’s a military action… but whatever it is it’s probably not for the better. We shall see.

Regards,

CIGA Bill Holter
Miles Franklin Associate Writer