Oil-rich Sheikhs in the Middle East are scared. How do I know?Because they are buying gold like crazy!First, we got the news that Saudi investors spent $3.47 BILLION on gold in a recent two-week period. On a ratio-to-GDP basis, that's like investors in the U.S. spending $131 BILLION.Why are they doing this? The only explanation I've heard is that the Saudis are turning to gold as a safe haven in the midst of the global financial crisis. And since the financial crisis kicked into high gear in August ... something must be scaring them quite a bit more right now.
Second, Reuters reports that Iran is converting some of its foreign currency reserves to gold. Iran has $120 billion in foreign currency reserves ... there's no details on just how much was shoveled into the yellow metal.Third, gold dealers in Dubai reported running low on gold during the recent Indian holiday, the Festival of Lights, a traditional time for Indians to buy gold. More than 50% of the population of Dubai originally comes from India. And about 20% of the world's gold is traded in Dubai.The world is in the grip of economic hard times — over 40 countries are officially in a recession. Japan just joined that unhappy club. And the euro-zone nations are already there.The oil producers are used to a world where U.S. oil imports always go up. But that world has been turned on its head. In September, crude oil imports dropped to 8.4 million barrels per day, down a whopping 16.5% from the average of 10.1 million barrels registered a year earlier.U.S. crude oil tumbles.This is helping the U.S. trade deficit, but for all the wrong reasons. The way to get lower oil prices is through conservation. Now though, Americans are being forced to conserve by economic hardship.And since the U.S. uses one-fourth of the world's oil, our falling imports are a major driver of cratering oil prices ...There is strong support for oil at $50. But you know that the Saudis, Iranians, Venezuelans and other OPEC heavyweights made their budget plans based on much higher prices. And cheap oil means the only way they can make up revenue is by pumping more oil ... which should weigh on prices even more.Looking forward, it gets worse for the oil producers ...Just last week, the Energy Information Agency projected that OPEC could earn $595 billion in 2009. That's way, way down from projections of $979 billion of net oil export revenues in 2008, and even lower than the $671 billion it earned in 2007.Saudi Arabia earns 29% of OPEC's total revenues. If their revenues go back to 2006 levels, what will that do to the political situation in a country that is already sitting on a fundamentalist Islamic powder keg?Yeah, that might be a really good reason for the Saudi fat-cats to buy gold
