The Other McCain

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Bahrain Burning, Silver Soaring

Posted on | February 17, 2011 | 11 Comments

Trouble in the Sunni kingdom in the Persian Gulf that is home to the U.S. Navy’s 5th Fleet:

MANAMA, Bahrain — Troops and tanks locked down the capital of this tiny Gulf kingdom after riot police swinging clubs and firing tear gas smashed into demonstrators, many of them sleeping, in a pre-dawn assault Thursday that uprooted their protest camp demanding political change. . . .
Foreign Minister Khalid Al Khalifa justified the crackdown as necessary because the demonstrators were “polarizing the country and” pushing it to the “brink of the sectarian abyss.”
Speaking to reporters after meeting with his Gulf counterparts, he also said the violence was “regrettable.”

Here’s a video report from Euro News:

Raw footage from Russia Today:

Instability in the Middle East is bad for business

Qatar benchmark stock index fell to the lowest this year and Bahrain’s 2020 dollar bond dropped to a record on concern unrest in the Persian Gulf may spread after protests escalated in Bahrain. . . .
Markets in the United Arab Emirates, Kuwait and Oman are closed today for an Islamic holiday, while Saudi Arabia’s is shut for the weekend.
Investors are “de-risking due to the events in Bahrain mainly,” said Mahdi Mattar, head of research at Abu Dhabi-based CAPM Investment PJSC, an investment banking company. “Both local and the few international investors might want to reduce their exposure” amid the unrest and as most markets are shut.

Instability always creates a market demand for security. Gold hit a five-week high today, but the real hot action is in silver:

Silver hit a session high of $31.38 an ounce and was up 2.4 percent at $31.37 an ounce in afternoon trading.
The gold-silver ratio — the number of silver ounces needed to buy an ounce of gold — fell to a low of 44, a key area near its lowest level in five years, as silver has outperformed gold. Year to date, silver was nearly 2 percent higher, swinging to positive territory with Thursday’s rally, while gold was still 3 percent lower.
The prospect of rising inflation, not only in areas currently affected by the phenomenon such as China and India, but also in the United States and Europe, has become an oft-cited reason to hold gold in recent weeks.
“The mood of the market is that an inflation story, a war story, an Egypt story, a Bahrain story will all be bullish for gold, because the market is looking for those at the moment,” said ANZ Bank analyst Peter Hillyard.

In 1986, you could buy silver for $6 an ounce. It’s now trading at five times that price.


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