This is HUGE, very bullish for gold and extremely bearish for the U.S. dollar. If this story is true, and we believe it is, this is the next step in the trend away from the dollar and towards gold. In our January 9th article titled, The End of the Dollar, we pointed out a range of agreements between nations to start trading in their home currencies. Including China, the #2 economy, and Japan, the #3 economy. We also pointed out that by Iran attacking the dollar, it probably meant war, as the U.S. has twice in the past 10 years shown physical aggression to anyone who threatens the U.S. dollars’ role as reserve currency. Both Iraq and Libya were more about the U.S. dollar than most people know, in fact, we are unaware of even 1 news agency who has discussed Gaddaffi’s plan to create an African gold backed currency that would be used to purchase oil.
We should note that Europe has also banned Iran from trading gold and silver. This of course shows that gold and silver are a lot more than just “old banker traditions” as Ben Bernanke would have us believe.
As Ron Paul stated in the Florida debate last night, the war with Iran has already started, sanctions are an act of war. Blockades are an act of war, and sending 6 war ships led by an aircraft carrier through the Strait of Hormuz is an act of aggression. The drones are already flying over looking for targets. In our opinion, when this war officially starts with bombs exploding, we will see $2,000 gold and $150 oil almost overnight.