Israeli Army Chief Ashkenazi: Prepare for all-out war

In his final days on the job, Chief of Staff Ashkenazi warns about growing radicalization in region; given recent changes across Middle East, Israel must prepare for a battle in several theaters, he says
Boaz Fyler

Given recent changes in the Middle East, Israel must prepare for a battle in several theaters, outgoing IDF Chief of Staff Gabi Ashkenazi said Monday at the Herzliya Conference.

"The connection between the different players requires us to contend with more than one theater," he said.

The radical camp in the Middle East is gaining strength, Ashkenazi warned, adding that "the moderate camp among the traditional Arab leadership is weakening." He also made note of what he characterized as the "fascinating phenomenon" whereby power is shifting to the people of the region thanks to online social networks.

The army chief said that in the wake of the growing threat of radical Islam among Israel's neighbors, the defense budget would have to be boosted in the coming years. The main change faced by the army is the widening spectrum of threats, he said.

"Because of this spectrum, we must prepare for a conventional war…it would be a mistake to prepare for non-conventional war or limited conflicts and then expect that overnight the forces will operate in an all-out-war," he said. (more)

3 Coal Stocks: Buy, Sell or Hold?: PCX, ACI, JRCC

One of my top-performing picks from last year was Patriot Coal(PCX_). This mid-size U.S.-based coal operation gained 25% in 2010. Impressive as that may be, the stock did not really gain any steam until the last three months or so of trading. In fact, shares had been in negative territory when that explosive rally began in September.

The gains for Patriot in recent months mirror the gains for the sector. From September to the end of 2010, Patriot shares approximately doubled in value and kept on going right through the first month of 2011. After peaking at $29 per share, Patriot took a step back on Feb. 3 after it was announced that its largest stakeholder, Arclight Capital, had liquidated its 12% position in the company.

In addition to the action in Patriot Coal, the sector received another piece of news with the announcement that Alpha Natural Resources(ANR_) was buying troubled mining operator Massey Energy(MEE_). The $7 billion deal allowed Alpha Natural to surpass bidding from other players, possibly including Arch Coal (ACI_) and Arcelor Mittal(MT_), and represented a 21% premium over current market prices. (more)

NYSE Margin Debt Hits Fresh Post-Lehman High

China, Largest Wheat Grower, Facing Threat of Drought

China, the world’s largest wheat producer, is contending with severe drought in the main region growing winter varieties of the grain, adding to concern about food supply at a time of record global prices.

Rainfall has been “substantially” below normal in the North China Plain since October, with a thinner cover of snow that protects plants against frost, the United Nations’ Food and Agriculture Organization said in a report today. That may harm the crop scheduled to be harvested in June, the FAO said.

Wheat traded in Chicago, a global benchmark, surged 76 percent in the last year as drought in Russia, flooding in Canada and parched fields across Europe ruined crops. Protests partly linked to food prices have erupted across North Africa and the Middle East in the last month, spurring governments to accelerate grain purchases to contain domestic prices.

“The drought has been bad enough for long enough in China that the crop is not likely to be what it was in 2010,” said Alex Bos, a London-based analyst at Macquarie Bank. “The thing with winter kill is there’s no way you can quantify any of the damage until the crop comes out of dormancy.” (more)

Buying Silver While It’s Still Relatively Cheap

By The Mogambo Guru

02/07/11 Tampa, Florida – James Cook of InvestmentRarities.com reminds us, in his “Market Update” newsletter, that the silver inventory held above ground totals 1.4 billion ounces, and that annual industrial use of silver is 900 million ounces, so that a year and half’s worth of silver exists, “although a third of it is destined for industrial consumption,” which has been increasing its use of silver by 18% in 2010.

And it surely will be used in industrial consumption, because as Mr. Cook says, “it’s hard to fathom all the bullish aspects credited to silver. You have a rare metal used in so many important industrial applications as to be termed miraculous,” so much so that “the billions of ounces mined over 2,000 years are gone forever.”

In fact, I am considering raising money to launch a Discovery Channel special, which will be a revealing new documentary that blows the lid off the explosive situation in silver, beginning with how things would have been worse a long time ago if the Neanderthals had invented electrical generation and a distribution network, both silver-consuming, 100,000 years ago.

And ditto those Renaissance hotshots who everybody thinks are so hot, but couldn’t even come up with a good cell-phone, or how Thomas Edison can invent a light bulb and the phonograph, but not take the logical next step of inventing the CD and CD player, which would have produced much better sound quality than those stupid, scratchy, tinny wax cylinders of his. (more)

An ETF to Profit From the Bond Crash

ProShares Short 20+ Year Treasury ETF (NYSE: TBF) — This fund moves inverse to the daily performance of the Barclays Capital 20+ Year U.S. Treasury Bond Index.

The trend for Treasury prices is sharply down, supported by Fed pressure to increase interest rates through the continued inflationary policies of QE2. Since history has shown that it is usually better to go with the Fed’s policies rather than against them, this appears to be an investment that offsets the impact of increasing the money supply, which in turn, leads to lower bond prices.

TBF consolidated with a saucer for 11 months before a breakout at $45.50. Note the increase in buying volume and the cross of the 50-day moving average through the 200-day moving average (golden cross), which signifies a bullish long-term change in trend.

The target is $50, but buyers should be prepared to hold TBF as a hedge against lower bond prices and higher interest rates.

Eric Sprott On A "Gold Tsunami"

Gold Tsunami

By: Eric Sprott & David Franklin of Sprott Asset Management

Ignoring real estate, most people invest their hard earned money in paper things. Stocks, bonds, annuities, insurance - it’s all paper, and it sits nicely in our bank accounts and shows up on our computer screens. Halfway across the world, investors in China and India have never trusted paper investments as a store of value - and they’re converting their hard earned paper money into gold and silver bullion. Not that this is anything new. It isn’t. But the scale and speed with which they are accumulating precious metals IS new, and it’s driving the fundamentals that we believe will lead to higher prices in 2011.

Demand for the metals is literally exploding in Asia, and it’s creating shortages of physical bullion around the world. The statistics are extraordinary. China, the world’s largest gold producer, now requires so much of the precious metal (in addition to what it already mines) that it imported over 209 metric tons (6.7 million oz) of gold during the first ten months of 2010. This represents a fivefold increase from the estimated 45 metric tons it imported in all of 2009.¹

According to the World Gold Council, Chinese retail demand for gold increased by 70% from October 2009 to September 2010, representing a total of 153.2 tonnes of gold imports. Yet, over the same period, the demand for gold jewelry rose by only 8%.² There is a clear trend developing for Chinese investment in gold as a monetary asset, and China is buying so much gold for investment purposes that it now threatens to supercede India as the world’s largest gold consumer. Chinese demand in 2010 is expected to reach approximately 600 tonnes, just behind India’s 800 tonnes.³ To put that in perspective, 2010 world mine production is forecasted to be 2,652 tonnes, which means China and India could collectively lock-up over half of global annual production.

Even more surprising is the increase in Chinese demand for silver. Recent statistics show that silver imports have increased fourfold from 2009 to 2010. In 2005, the Chinese exported just over 100 million oz. of silver.⁴ In 2010, they imported just over 120 million oz. This represents a swing of 200 million+ oz. in a market that supplied a total of 889 million oz. in 2009 - a truly tectonic shift in demand!^{5 (more)}