D-Day on August 22!

Mark down this date in your calendar: August 22. Next Tuesday, just five days from today.

That’s when the President of Iran has vowed to respond to the UN’s demand to STOP building nuclear capabilities. But as I’ll explain in a moment, the date also carries other dangerous, but little-known connotations.

I’m actively and aggressively preparing for what my War Cycle Forecasts tell me could be among the world’s worst years since the end of World War II.

It’s sad and unfortunate. I pray I’m wrong. But I fear it may be difficult to avoid.

Since I first started using them decades ago, my war cycle forecasts have pointed to 2007 through 2009 as a major period of unrest. They helped me pinpoint Gulf War I three years before it happened. They also helped me hone in on the Iranian nuclear crisis, which first burst into the headlines late last year.

Until now though, many critical aspects of the looming conflict were still foggy. But now I’ll venture to guess what the trigger may be, and how it could all play out …

August 22, a Key
Date in Islam

On June 6, the West offered Iran advanced technology and possibly even direct assistance with nuclear research reactors if the country would just agree to suspend its uranium enrichment program.

Iran’s top security decision-making body, the Supreme National Security Council, eventually responded:

“The package of incentives requires a logical time to study it … August 22 has been set for declaring [our] views.”

This is important: Neither the Western nations offering the package … nor a subsequent UN resolution said a word about an August 22 deadline for Iran. It was Mahmoud Ahmadinejad who picked this date for reasons that most Americans are unaware.

Their choice wasn’t arbitrary. In the Islamic calendar, August 22, 2006 equates to the anniversary of a sacred event: The 27th day of the month of Rajab of the year 1427. This is the day when many Muslims commemorate the night flight of the prophet Muhammad on the legendary winged horse Buraq, first to “the farthest mosque,” (Jerusalem) and then to heaven and back.

August 22 roughly coincides with another event exactly 240 years earlier â€” the conquest of Jerusalem by the Muslim warrior Saladin, the arch-enemy of the crusaders.

And perhaps most important, August 22 marks the approximate date that the 12th Imam in Islam, or Mahdi, is expected to return to the world. Shiites believe Mahdi will bring with him a new period of Islamic justice.

So don’t underestimate the symbolism behind this date. Ahmadinejad has been warning about it for a while now. And we can’t dismiss his tirades against the West, especially Israel, as just crazy rantings. To Ahmadinejad, and millions of his followers, this is reality: Iran is willing and able to act on its beliefs.

One of the world’s leading experts on Middle East studies, Professor Bernard Lewis of Princeton University, puts it this way…

“Iran holds an apocalyptic worldview and is determined to bring on a forced Islamic imposition on the world or the world’s destruction. Iran’s President Mahmoud Ahmadinejad has repeatedly stated that the first step is the total destruction of Israel. Ahmadinejad and his Shiite followers clearly believe that this time is now.”

Could the terror plot to blow up 10 airliners headed toward the U.S. have also been slated for August 22? We’ll probably never know for sure. But I suspect it was.

This is not about a coordinated conspiracy. It’s about millions of people, including extremists, who share the same deep-set religious beliefs. But based on my models and the mounting evidence, I do think …

All the Preconditions for a
Broader War Are Now in Place

Take a look at the situation in the world today. You’ll see that the conditions are ripe for a broader war …

The U.S. is bogged down in Afghanistan and Iraq.

The U.S. also has to deal with North Korea. Expect to hear more from Kim Jong Il as he takes advantage of the crisis with Iran.

President Bush’s waning popularity is inspiring their growing confidence. President Ahmadinejad said so himself in his recent interview with 60 minutes.

The U.S. is on shaky economic ground â€“ weakened by the cost of the war on terror, falling internal confidence, high energy prices, and a bursting real estate bubble.

The Arab world is convinced Israel has effectively lost its first war. To Hezbollah and others in the Middle East, Israel was the loser simply because the current conflict ended in a cease-fire, the first such outcome after three straight wins over the past six decades.

They’re declaring a victory for Hezbollah. And remember, Hezbollah is essentially an extension of Iran, supplied and financed by the country’s Revolutionary Guard. End result: Iran is more emboldened than ever.

Here’s what I’m expecting: A severe increase in volatility and financial risk by the end of August, and a high probability that we will see the beginning of a much broader war soon thereafter.

Take Immediate Steps
To Protect Your Wealth

I just picked up a few ounces of gold to help hedge the value of my savings and protect against the fallout from this global crises, now likely to get a lot worse.

It might sound like I’m being extreme. But I look at it this way â€¦

If I’m wrong, I have nothing to lose. I’ve prepared for the worst by protecting my family’s wealth with conservative investments.

If I’m right, my investments should go through the roof â€” while everyone else watches their once solid blue-chip stocks and bonds get hammered, and their paychecks get eaten up by sky-high energy prices and soaring war-related interest rates.

As far as I’m concerned, the price of not preparing â€” of not listening to what history and the markets are telling us â€” is too expensive. You need to prepare and take out some insurance now. And you don’t have much more time to do it.

Here are some steps to take right now …

First, keep your cash in a safe money market or short-term Treasury- only fund. I consider this absolutely mandatory. Yields are now as high as 5% and I can’t think of a higher quality investment in the world today.

Second, make sure you’re not holding any long-term bonds. Typically, long-term U.S. government bonds have held their value in times of war as nervous capital has deemed them among the safest investments in the world. But that was when the U.S. was not a party to those wars.

Today, it’s different: The U.S. is overtly in at least two countries and covertly at war in several more. Combine that with rising inflation, our country’s humongous debts, and the falling value of the U.S. dollar â€” and I think U.S. government bonds could fall flat on their faces.

Third, stay away from corporate bonds, too. Like government bonds, they are vulnerable to inflation and rising interest rates. Plus, in the event of war and falling cash flows, you could see a massive round of credit downgrades. In short, I think the risks outweigh the rewards.

Fourth, if you don’t own key oil and gas shares, stop waiting! If you want broad exposure, consider the Oil Service HOLDRS (OIH) Trust ETF, which contains a number of major companies.

Or, for more specific recommendations, see my Real Wealth Report.

Fifth, absolutely â€” no doubt about it â€” own gold!

Consider 5% in gold bullion. Not rare coins â€¦ or even gold bullion coins like the American Eagle and Canadian Maple Leaf. Instead, buy 1- and 5-ounce gold ingots from your local dealer and keep them in your bank safety deposit box.

Alternatively, look at the streetTRACKS Gold Trust (GLD). It trades like a stock, but each share represents one-tenth of an ounce of gold.

When it comes to gold mining shares, remember: not all of them are worthy of your investment dollars. Some hedge their gold holdings, which makes it more difficult for them to profit wildly as gold explodes higher.

Sixth, consider select defense stocks that will benefit from the current war environment. For an abridged article from our expert on military and defense stocks, John Burke, click here.

Best wishes,

Larry

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About MONEY AND MARKETS

MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Monica Lewman-Garcia, Wendy Montes de Oca, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.

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