Gold Demand Soars As Iraq Falls To Militants

  • Posted Thursday, June 12, 2014 at 08:17 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and Silver bullion prices extended gains on Thursday, as Gold, on pace for its best day in nearly three weeks, added 0.68 percent to $1,273.70 an ounce on short covering as violence exploded in Iraq, driving safe-haven demand skyward, while Silver jumped 1.77 percent to $19.55 an ounce.
 
…“Gold and silver shorts ignored Iraq’s Islamist threat nearly as badly as Baghdad,” said BullionVault's Adrian Ash. “Last week’s extreme positioning is getting unwound fast, and there could be further to run yet if crude stays firm and equities soft.”
 
Just as Iraq, the second largest oil producer in the Organization of Petroleum Exporting Countries (OPEC), was starting to stabilize oil markets, the collapse of the Iraqi army in Mosul and surrounding towns to the faction known as the "Islamic State in Iraq and Syria" (ISIS) now threatens the stability of the entire nation. ISIS, arguably the most dangerous militant group in the world, has thrived on the civil war in Syria and the departure of U.S. forces from Iraq.
 
ISIS, whose aim is reportedly to create an Islamic state across Sunni areas of Iraq and Syria, now controls hundreds of square miles of undisputed Iraqi territory as state authorities have relinquished their weapons and fled. So far, the geopolitical risk is being confined to the northern regions of Iraq. “As a result, it does not yet pose a significant threat to the country’s oil production since the northern region represents only a small proportion of total Iraqi oil production,” said Deutsche Bank.
 
ISIS imposes Sharia law in the towns under its control. Boys and girls are separated at school; women are required wear a full veil in public, and Sharia law is often brutal.

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