Is it possible that militant Islam is establishing a 3rd front in the global conflict, in the Horn of Africa, to go along with the fronts in Iraq and Afghanistan? Increasing evidence suggests so.
1. The U.S. government says four al-Qaida leaders, believed to be behind the 1998 bombing of the U.S. embassies in Kenya and Tanzania, are now leaders in the Islamic militia.
2. "'Hundreds' of foreign-born fighters are fighting alongside Islamic courts' forces in battles around Idale and Deynunay villages, with more foreign fighters being deployed to the frontlines," news sources from within Somalia are reporting.
3. A handful of Islamist prisoners taken on the battlefield by Ethiopian forces were reportedly holding British passports.
4. The Horn of Africa is adjacent to an important oil shipping route, making it a strategically important enough location for a chapter of the U.S. Operation Enduring Freedom to be stationed in neighboring Djibouti to monitor and intervene, as appropriate.
If this conflict continues to escalate such that people do perceive that a "third front" has been opened, that will have bullish implications for Gold. Nevertheless, investors in the likes of TRE or NSU which operate in the samer general neighborhood, may wish to tread carefully.
MarketWatch mentioned the Somalia conflict as a factor in the rise in gold prices today, citing the Gartman Letter and Jon Nadler of Kitco.com fame.
2 comments:
Hi Titan,
I see you're causing a ruckus over there on the yahoo board.
Well, just to be up front, I have read that board for a while and have noticed many posters of a bearish sentiment come and go. I also own a modest position in TRE, so I'll also disclaim that.
You are new to that board, although I have seen you on RGLD's for quite some time.
Let me comment that I think you're trying a little too hard to arouse further bearish sentiment towards TRE and paint Jim Sinclair as conviently ignorant, if not even stupid.
You make a good argument about this regional unrest in the Horn of Africa, but you then direct that argument at your convenience towards NSU and TRE.
Mind you, TRE operates in Tanzania and has a buffer state of Kenya in between it and Somalia.
Teven,
Thanks for your comments. I'm not intentionally causing a ruckus, just traying to add a bit more balance to that board, which is tilted heavily towards "fans" rather than serious investors.
I've traded TRE before and TRE has been good for me overall. NSU slightly less so.
However, my original point was to raise the question, why hasn't JS mentioned this issue on MineSet? I mean you have to admit, if there's the slightest bullish link between Gold and some news regarding political instabiliy, JS is quickly all over that. But in this case, it doesn't even get a mention from him, and instead you read about it from MarketWatch as a factor in gold's advance.
What is obvious to me is the folloiwng:
1. The Somalia situation is different now than it was a year ago or even several months ago and the regional risk has risen since then.
2. This situation has bullish implications for gold.
3. This situation may have negative implications for companies operating in the vicinity, depending on what the repercussions are and how far this situation escalates.
I personally believe that the reason why JS hasn't mentioned about this is because the situation is a bit too close to home. But if that is the case, then I think it's a little bit disappointing because his MineSet is supposed to be the place where "the Spin stops here". JS blames the government and the media for being selective about what information they focus on. Perhaps JS is guilty of a little bit of selectivity himself?
I'll let you be the one to judge.
I'm not going to spam the TRE board about this issue. I've mentioned this only 2 or 3 times in the last few weeks and that's sufficient for now, but if I think the situation changes and there's a reelated issue worth raising, I might. I'll probably also be posting updates on this situation here, because I genuinely believe that it's qutie relevant to Gold.
By the way, you are correct that there is a buffer state in Kenya, and that helps TRE. NSU also has Djibouti as a buffer, but Djibouti is much smaller than Kenya and Eritrea has strong anomistity with Ethiopia, which is now heavily involved in Somalia, so I think that NSU's situation may be a bit less comfortable than TRE's.
Nobody can know for sure how much of an influence this situation has on stock prices, but I think that it may have been partly responsible for NSU and TRE's recent underperformance.
Cheers,
Titan
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