Latest update March 29th, 2024 12:59 AM
Jan 08, 2020 Editorial
One is good for Guyana, while the other does not bode so well for struggling citizens, as it has a certain kind of history that runs amok at the first sign of pressure. There is gold that brings in, and then there is oil, which takes out, as we are still buying the latter from others as of this date.
First, with the US-Iran development as a backdrop, the gold markets skyrocketed, as is the norm, where investors seek the accepted and traditional safe haven provided by the commodity. It is the place to put one’s money, while the storms rage and until the dust, hopefully, blows over. Until then, it is any port for a storm, and gold is the best harbour that is known.
That is a positive for this country, since gold sales – as officially sold to the responsible state agency and declared and exported by subagents through recognized channels – are then in a position to capitalize on a rising price environment. The offshoot of positioning for, and taking advantage of such higher prices, is that more precious foreign exchange flows into the coffers of the Treasury. Every dollar counts and there is so much work to do for each of those scarce dollars that come.
From all indications, the tensions, threats, and fears originating from that drone strike are not likely to be tamped down anytime soon, by either of the parties. In fact, it would appear as though the American side, sensing a rare opportunity to double down, has done just that through ratcheting up the pressure in a relentless squeeze play that speaks towards aggression and readiness to unleash hostilities in very tangible forms.
The Iranians have contented themselves with a few sharp, but sparse words, as they lick their wounds and seek to recalibrate for a strong response. Yet before they can even get to that retaliatory point, the indications are that the American leader is determined to take the fight to them and stuff things down their throats, come what may. The same belligerence that is now lauded in some quarters, is also feared in many others, both domestic and foreign.
To be clinical about this, all of these developments are good for the gold and other commodities markets, as matters stand poised over a tinderbox. That is the upside, in terms of what could come back to this country from gold proceeds.
Then there is the negative, relative to the same forces that catapulted oil where it was over $70 a barrel momentarily. It has settled back to below $70 and hovers in the mid-$60 range. The expectation is that trading is sure to be volatile, with prices gyrating and whipsawing with every development that points to intensifying tensions and the greater probability of confrontation, if not armed conflict.
Everything has to be looked at, with nothing left unaccounted for, or to the chance that it does not feature. Oil infrastructure – rigs, pipelines, tankers – are due the most severe tests, since they make for such vulnerable and indefensible targets. The Strait of Hormuz itself is a hotbed of crude traffic and other activity, as well as virtually a Persian lake, which makes it tempting to be utilized as a launching pad for armed escalation, and armed is what it is going to be, if any retaliation is to be recognized as possessing teeth.
While oil prices bubble and blow (hard), the irony is that Guyana is an oil producer, but currently still subject to importing its needs, at least for the near future. Recently, it was reported in the media that there are multiples of the nation’s need for cooking gas coming from its wellheads, the flares of which can be captured. That alone is a difference maker, where it counts, which is in the pocket, but still not accessible domestically just yet.
Meanwhile, the people operating what passes for the transportation system are watching silently, with a view to revisit their prices. It is never downward, to the dismay of the travelling public. Perhaps, given where we are, government could reduce some of the related taxes, should oil prices hit the roof, if only to give the suffering public some relief before the floodgates open.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
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