All Is Not Well In Iran

Informed sources, including the Stratfor Consulting Group, believe that the action was taken to undermine the popularity of President Ahmadinejad among the Iranian public. Many elements in the Iranian government, including the military, Ayatollah Khameni, the parliament, and other power centers believe that he has gone too far with his rhetoric and actions toward the U.S. and the West.

In essence, this action is the result of a struggle for control between the pragmatic conservatives, represented by the above groups and the ultra conservatives headed by Ahmadinejad and his allies.

This announcement is widely believed to be a herald of more instability in Iran. Some believe that the price increases and rationing could lead to riots and other problems for the Ahmadinejad regime. I have previously mentioned in memos that all was not well within the Iranian economy, and this news will be badly received by the public at large, in our opinion.

If riots occur, we can reasonably expect a higher risk premium for oil and higher oil prices. This will lead to more inflation pressures in the world. More inflation pressures mean higher interest rates, higher commodity prices and higher gold prices.

Guild Investment Management, Inc., is a registered investment advisor. All material presented herein is believed to be reliable. Investment recommendations and opinions expressed in these reports may change without prior notice.

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About the Author

Mr. Guild founded Guild Investment Management in

1971. Prior to founding the company he was an

analyst at a bank and a hedge fund. Mr. Guild is

a recognized expert in the areas of international

investing and economics. He has been a writer and

speaker on economic issues for 30 plus years and

has been widely quoted in the world media. He

holds a BA in economics and an MBA with highest

honors.

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