The Russian Bear Awakens… Part 1
EDITOR’S NOTE: Russia is becoming the bully of the world and all eyes are on their activities in the Ukraine. We’ve asked our friend, Kevin, who lives in Estonia, which is a stone’s throw from the Russian border and the Ukraine crisis, to give us a boots on the ground update… I warn you, he doesn’t pull any punches. Here’s Kevin…
By Kevin Kerr, Special Contributor to the Dynamic Wealth Report
(TARTU, Estonia) So I was sitting here the other afternoon in the town hall square in Estonia’s capital city, Tallinn. I was with two close friends who also happen to be large Forex traders.
We discussed in detail what is actually happening right now with Crimea, the Ukraine, Russia, America, and much more.
The chess match of a lifetime is happening right now, and those investors who know all the facts will move themselves way ahead in the game.
There is so much disinformation out there right now, especially in the mainstream American media, that it can be very confusing for the average or even professional investor to decipher and make money with, or simply protect their money they already have.
My goal is to help shed some light on this tinderbox of a situation, and give you some insights you can use in your own investing. After all, we all want to navigate this situation and the ramifications from it.
Our Boots On the Ground Philosophy!
In this series of 3 articles I am going to present you with the facts as I know them and the investment path I see clearly as holding the best opportunities.
Now for those of you who have never heard of me, or maybe have just seen me on TV, or at a conference somewhere in the world, let me tell you that I have been trading commodities and resources for about 25 years on most of the exchanges in North America and in Europe, and I have worked with thousands of investors from novice to expert and everyone in between.
I also happen to not only write about the Baltic region and Russia, I actually live on the border of Russia with my wife and two young daughters, here in Estonia.
Now my loyal readers and followers know that one thing I value above all else is actually going somewhere and seeing the situation for myself. And then and only then relaying it to my readers or even sharing it with them via video or other medium so they can see for themselves too.
We spare no expense to travel to wherever the investment opportunity in resources takes us, whether it be in the agricultural palm oil market in Singapore, or the energy market in Houston Texas, or the desert of Dubai, or the coffee market in Vietnam, if there is opportunity, we’ll take you there.
From Russia With Love
Now in this article and the 2 that will follow shortly, I‘m going to outline what I feel is happening right now between Russia and the Ukraine as well as how China, the US, and the EU are involved.
It’s a complex web of who wants what from whom, but I will try and explain it in plain English for you, as well as give you a handful of specific trading ideas you can consider adding to your current portfolio.
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Now today let’s start out by looking at why Mr. Putin moved into Crimea in the first place and why he has so much interest in the Ukraine anyway. Once we fully understand Mr. Putin’s motivations we can better understand the true dynamics that are taking place.
Make no mistake, this invasion and annexation is primarily about energy supplies and strategic transport for Russia.
Bottom line: It’s about money and power.
Don’t be fooled for a minute that this is about “liberating” the oppressed Russian minority in the Ukraine, or about providing a better quality of life for Russian speakers there, as has been suggested by Mr. Putin and his advisors.
No this is about the vast supplies of natural gas in Crimea and their strategic location on the Black Sea.
As you can see in the chart below, the Russian pipeline network runs directly through the Ukraine and into Western Europe which accounts for over 30% of all Russian gas purchases.
Germany gets a whopping 40% of its gas supplies form the Kremlin in fact.
And you see those dark green colored countries, the one at the very top on the right is Finland, and just below that the tiny country on the border of Russia is where I am, in Estonia.
The dark ominous green color shows countries that are 100% dependent on Mr. Putin for their gas, and not only can he set the prices at whatever level he wants, he can also switch off the spigot at any given time.
He has done so in the past during the winter with Ukraine and the result was deadly and expensive for the Ukraine people.
Check and Mate…
Russia’s pipeline network goes from deep inside Russia through the Ukraine as well as Belarus and the Baltic Sea to Western Europe. This vast pipeline network is critical to Russia’s reach into the thirsty and lucrative Western market.
By locking up control of the Crimea region Putin has essentially added not only a strategic port location, but vast reserves of natural gas to his arsenal.
In addition, he has shaken up control of all of Ukraine and made it susceptible to being further annexed to Mother Russia, a little at a time.
Russia is biding it’s time and testing the waters, not biting off more than it can chew or trying to create the impetus for World War III, it’s a very fine line to walk indeed.
Mr. Putin has in my opinion been planning this invasion and annexation for a very long time.
When finally the discord in the Ukraine reached crisis mode, he unleashed his plan. While the World immediately condemned it, little else has really been done.
Sure, some sanctions have been imposed by the US and EU, and Russia was dismissed by the G8, but all of that has had almost no effect.
The value of Crimea and the vast resources it holds, far outweigh the truly toothless punitive measures that have been imposed on the World stage thus far.
I spoke about it with Fox News Anchor Neil Cavuto when the crisis was unfolding LIVE from here in Estonia, you can watch it here.
Bread Basket of Europe
Sure, so most people are aware of the gas reserves in Crimea and the value of Ukraine as a transit hub, but there is also something else Russia can desperately use that Ukraine offers, and that’s agriculture.
The rich dark soil in Ukraine yields some of the best and most abundant grains and grain products en masse, in all of Europe.
Ukraine is basically to Europe what the Midwest is to the United States. Grain production in the Ukraine is massive and agricultural exports are the majority of the GDP for Ukraine.
Russian long-term strategy is very clear to me. Build a solid relationship with the Chinese and super serve the relationship by providing the hard tangible assets that China desperately needs for its billons of people.
Fuel and Food are right at the top of the list, and Russia knows this. Already China and Russia have been meeting extensively discussing various ways they can work together and also about transacting that business in something other than the US Dollar.
In fact the US Dollar is not even involved in these discussions.
Russia is in a key position to provide much needed energy and food supplies to China and if they had Ukraine in the fold completely again, they would have even more capacity to do so.
The race for the resources is on, and the US is way behind. Eventually the love affair with the US Dollar and Treasury market for China will implode, and then the US is in deep trouble.
When the music stops there will simply not be enough chairs at the table for the US, then it really will be check and mate.
How To Position Yourself for the Coming Endgame!
The game may be more or less coming to an end and pushing the US out, but that doesn’t mean you cannot take advantage of the situation and take action to not only protect yourself and what you and your family have, but also to prosper greatly from the changes and invest in stocks and commodity resources that are going to soar.
Hard assets, actual tangible goods are going to be the new reserve currency of the future, not the US Dollar.
All the endless printing of money and monetary easing have set up the greenback for an ominous fall.
When exactly will it crash?
Nobody knows for certain, and it really doesn’t matter, because the fact of the matter is it will be gradual, like the boiling frog syndrome. The boiling frog syndrome, you know…
The Boiling Frog Syndrome and America
The frog is in the pot of cold water, and somebody turns on the flame. Slowly the water gets a little tepid, and then after a few minutes it starts to get quite warm, a little uncomfortable but nothing unbearable.
Then after 5 minutes it’s getting scorching hot (that’s about where we are at now in the US). Then in 7 minutes the water is boiling and the frog is dead, it’s too late.
The frog should have jumped out earlier, or at least had an escape plan, or at the very least considered what might happen.
Right? But he didn’t until it was too late.
The fact of the matter is that the boiling frog situation is happening to millions of American’s and others right now, and they don’t even know it, or are in complete denial. Don’t be that person.
The situation is getting worse, not better. The time to act is now. In parts 2 and 3 of this article series “The Russian Bear Awakens” I will give you at least 5 specific trades you can use to jumpstart a new investing portfolio or fortify and existing one you already have.
I will also give you more information on the current situation directly from where it’s happening, not from some desk in New York.
The Russian Bear is wide awake and on the move, and so are we. Please be on the lookout for my next article in this 3 part series only here at the Dynamic Wealth Report.
Until next time,
Kevin Kerr,
The Resource Renegade
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Category: Commodities
