Bitcoin, Gold Remain Resilient Amid Mideast Turmoil
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| By Bob Czeschin |
As the conflict in the Middle East continues, most eyes are on oil.
Rightfully so. The latest attacks have seen significant disruption to shipping routes. Over the past month, the price of oil has shot up almost 50%!
This wasn’t a surprise.
Even before the U.S. and Israel launched their attacks, I told you to get exposure to oil prices. That’s because you don’t need an econ degree to see how an interruption in the supply chain could light a fire under oil prices.
Oil Blasts Above $110 a Barrel
About 21 million barrels of petroleum move through the famously narrow Strait of Hormuz, at the foot of the Persian Gulf, each day.
That’s roughly 20% of global consumption that passes through a small bottleneck every 24 hours.
Trump may have sunk Iran’s tiny navy. But the threat of drone and missile attacks remains. And in such confined waters, even marine mines can be deadly barriers to maritime traffic.
Plus, oil tankers are very slow-moving targets. That makes them vulnerable to swarms of small, fiberglass speedboats, packed with plastique, piloted by jihadists willing to sacrifice themselves to take out their targets.
Which is why Iranian threats to shipping have managed to nearly choke off maritime traffic through the Strait.
The damage is now rippling through the supply chain and even impacting production …
- Qatar’s liquefied natural gas production (LNG) facilities have fallen under attack by Iran.
- And on March 3, Iranian air attacks caused operations to be halted at Port of Salalah, Oman’s biggest seaport.
Already Kuwait, the United Arab Emirates, Iraq, Saudi Arabia and Qatar have been forced to curtail oil and gas production as a result. This is a key reason oil prices have gone ballistic.
And it’s not just oil by the way.
About 7% of global aluminum supply flows through the strait. So do key building materials like cement, concrete and sand that are produced across the Middle East.
Even pharmaceuticals made in India pass through the Strait to Mideast and Mediterranean markets.
The longer the war drags on, the greater Teheran’s power to derail global supply chains and wreak economic havoc on much of the world.
Indeed, this is a key reason stock markets around the world have been falling, and inflation ticking up — as fighting intensifies.
Even AI is feeling the effects of the fighting.
The first military attack on a commercial data center in the history of warfare occurred March 1. That’s when Iranian suicide drones plowed into server farms run by Amazon AWS in the UAE.
This is a growing risk to AI’s global buildout that analysts have yet to incorporate into their spreadsheets.
In recent years, UAE has encouraged local investment in server farms and data centers. And inadvertently thereby, exposed key elements of the global internet to war damage.
Investment Implications
Both Bitcoin (BTC, “B+”) and gold have been remarkably resilient amid the turmoil in other investment markets.
Bitcoin closed at $67,000 and change the day Trump released the dogs of war. As I write, it hovers just under $68,000 with the top of its trading range still in sight.
Gold jumped about 10.8% when the bombs started flying. But it gave it all back hours later when Trump seemed headed to at least an initial triumph over Teheran’s ruling mullahs.
Looking ahead, however, perilous times loom.
War is a great destroyer of paper currencies. And this one has the U.S. dollar squarely in its crosshairs. As the fighting drags on and metastasizes, gold and Bitcoin are both likely to do extremely well.
So, make sure you own ’em both.
If you’re new to crypto, Weiss Crypto Investor is a great way to stick your toe in the water for both assets.
In it, Juan Villaverde uses his Crypto Timing Model to target the best entry and exit opportunities for crypto’s biggest coins.
That’s how his members were able to lock in a 189% gain on PAX Gold (PAXG, stablecoin) last month — a crypto pegged to the price of gold.
Best,
Bob Czeschin
