(Interviewed by Louis James, Editor, >International Speculator)

L: Doug-Sama, I've heard you say you think the US is setting Iran up to be the next fall guy in the >Iran is likely to attack the US, which is about as absurd as the allegations Bush made about Iraq bombing the US, when he fomented that invasion. It's starting to look rather serious at this point, so I do think the odds favor actual fighting in the not-too-distant future.

L: Could they really be so stupid?

Doug: You know the answer to that one. We're dealing with criminal personalities on both sides, and criminals are basically very stupid - meaning they have an unwitting tendency to self-destruction. One thing to remember is that most of those in power in the West still believe the old economic fallacy that war is good for the economy.

L: The old >

Now, it's hard to speak with any certainty on such matters, because most of what we have to go on are press reports. Governments keep most really critical facts on their doings to themselves, and what you read in the press is as likely as not just a warmed-over government press release - in other words, propaganda. Meaningless, if not actively deceptive. It is correctly said that in war, truth is the first casualty.

L: But we do have the Internet these days, with indie reporters offering coverage ignored by the talking heads in the mainstream media.

Doug: True; it doesn't keep the chattering classes honest, but it does provide some diversity of spin, from which we can try to infer what's really going on. And from all the various sources - mainstream and alternative, Western and from within the Muslim world - I have to say that it appears to me that the Iranians are not actually developing nuclear weapons.

L: Then why do they act in such aggressive and bombastic ways?

Doug: Western powers are pushing them around, telling them what they can and cannot do, and treating them like children or mental incompetents with no right of self-determination. How else would you expect them to react? They may have a collectivist theocratic regime, but it's also a proud and ancient culture.

Now, as you know, I don't think there should be any countries at all - not in the sense of the is a sovereign state. The Iranians resent people from other countries assuming the right to tell them what they can and cannot do with their uranium enrichment program, just as people in the US would if Iranians told them what to do with... well, anything.

L: Do you have specific data to substantiate your view that Iran is not focused on creating nuclear weapons?

Doug: I was just reading about an

L: Wasn't it too late to intervene by the time those countries announced their nuclear capabilities?

Doug: I don't think so. Israel was friendly, so Western powers looked the other way. North Korea was too rabid, so they were left alone. The other countries are too big. The cat's out of the bag at this point; any country can develop nuclear weapons, if it really wants to. But it's easier and cheaper to bribe a general - or maybe just a supply sergeant - in India, Pakistan, or Russia to get what you want.

Moreover, with the US on the rampage, prosecuting its counterproductive and unwinnable War on Terror, a lot of governments, especially ones unpopular in the West, have got to be thinking about acquiring nuclear capabilities. If Saddam had actually had nukes, the US would have left him alone, just as they've left the Kims to rot in the workers' paradise they've made out of

If you oppose nuclear proliferation, your first target should be US foreign policy, which is the biggest impetus behind the scramble to arms.

L: What about the argument that Iran would use nuclear weapons on Israel, if it had them?

Doug: That's ridiculous. It's true that just one or two nukes would turn most of Israel to glass, but it's a matter of mutually assured destruction (MAD), just as the detente between the US and USSR was. Israel is reported to have about 200 nuclear weapons, and the Iranians know it. Even if they launched a successful first strike against Israel, they would get wiped off the face of the earth in response. The regime in Iran is repressive and borderline lunatic, but they aren't that stupid. No way are they going to attack Israel with nukes. They not only cannot, but should not, be singled out for exclusion from the nuclear club.

L: But they're part of the axis of evil, don't you know?

Doug: Speaking of evil, it's evil to initiate the use of force or fraud. If Iran enriches uranium or even builds tools for war, that's not evil per se. But using force to stop them from doing something that is not in itself wrong is wrong, and that would make Iran's attackers the axis of evil.

In my mind, the US is the biggest threat to peace in the world today. I can easily imagine those in power in the US starting a war over any silly pretext, real or imagined. It could easily happen by accident at this point. Things go wrong. Maybe some young hotheads in Iran's Revolutionary Guard decide to take a boat out and attack a US frigate - launch a few RPGs at it before they're blown out of the water. Then the US feels it needs to mete out some punishment and launches a strike against the base the boat came from - which would be attacking the Iranian mainland - and the thing spins completely out of control. Could happen at the drop of a hat. Maybe the commander of a US ship has a streak of General Jack D. Ripper from Kubrick's Dr. Strangelove in him. Maybe the Russians or the Chinese - who are aiding the Iranians - mount a false flag incident, because they want to see the US get involved in another tar baby.

L: So... another case of not just doing the wrong thing, but the exact opposite of the right thing, with economic, political, and ultimately physical world consequences.

Doug: That's right. Just look at what they're doing now, trying to isolate Iran from the world with an embargo. That could be seen as an act of war.

L: Well, wait a minute. A blockade is regarded as an act of war, but if Western countries decide to harm their own economies by not trading with Iran, that's unfriendly, but not force or fraud.

Doug: Well, it would be forcing citizens in those Western countries to pay higher prices for things, denying them the choice of buying oil from Iran if they wanted to. But I agree; that's more a matter of criminal tyranny and stupidity than an act of war. Still it sure is prodding Iran, throwing rocks at the hornets' nest, as the US did with Japan before WWII. The Japanese basically have no domestic oil production and were getting their oil from the US and the Dutch East Indies. The US cut off both supplies, backing them into a corner, leaving them little choice but an aggressive response.

At any rate, I think all of this could backfire on the US. Since the Iranians apparently can't clear deposits through New York, where international dollar trades clear, they've made a very commonsense move to cut the US out of the middle and sell their oil directly to India, without using dollars. I think other countries will follow - and then what? Iran isn't going to want bushels and bushels of rupiah or yen or whatever. I think the odds favor them turning to gold. It's said that's one of the means of payment the Indians will be using.

Gold is the logical choice and the next step in the demise of the US dollar as the world's reserve currency. There's a lot of demand for the dollar to buy and sell oil. If countries stop using it, demand for the dollar would fall, at the very time the US is greatly increasing the supply of dollars. The day is coming when trillions of dollars outside the US will only be spendable inside the US. At that point it's game over for the dollar.

L: You've talked about the world going back onto a gold standard before. What do you say to the people who say that gold is a barbaric relic from the past that doesn't work in a modern economy - they can't go around with pockets full of doubloons to buy cars or chests full of treasure to buy houses...

Doug: Such people are not thinking rationally and are economically ignorant. As always, we should start with a definition: what is money? The short answer is that it's a store of wealth and medium of exchange. For reasons we've discussed and as Aristotle outlined over 2,000 years ago,

L: Note: We do endorse GoldMoney.com as a convenient and reliable way to own, trade, and transfer gold, but readers should be advised that Doug is an investor in GoldMoney.com.

Doug: Right. I like to put my money where my mouth is.

L: Okay, so you see this trend being bullish for gold, clear enough. But most of the gold ever produced in the world still exists in purified form in various vaults around the planet. Gold doesn't get used up like silver does, so there's plenty of supply. So, would the physical need for gold as money really impact the price of gold and related equities, or would that be more a function of governments further debasing their currencies?

Doug: Well, it's estimated that there are some six billion ounces of refined gold in human possession around the world, or, somewhat less than one ounce per person. Global gold production is said to be about 80 million ounces a year, or about a 1.3% annual increase in the supply of gold. That would be the steady, "natural" rate of inflation if we were on a gold standard. The amount of various currency units in the world is increasing at a much, much faster pace than 1.3%. Nobody really knows, not even the Fed, but depending on how you define the money supply, it would take $10,000 to $50,000 - or more - per ounce to back all of the dollars in existence with gold. Whatever the correct number is, I expect gold's price in dollars to increase dramatically as the world moves closer to and eventually adopts a gold standard.

L: So, any investment implications beyond the obvious? Buy gold and silver for prudence and protection, buy gold stocks for speculative leverage?

Doug: That's the basic recipe. And diversify your holdings internationally. You can never tell when the government of your home country will have a psychotic break.

L: What do you say to the people afraid that in a world so traumatized as to go back onto a gold standard, the risk of owning any paper asset, including gold stocks, would be too high? No one will trade gold stocks for a can of dog food in a Mad Max world...

Doug: That's a valid concern. You can't eat paper, and even owning shares in a gold mine may not be of much use in a real economic cataclysm - the US government shut down gold mining during WW II as a nonessential industry. It could happen again. But that's why, as you said, we own gold for prudence, and the stocks are strictly speculative vehicles.

But let's have some perspective. The security of your stock portfolio may become the least of your concerns if the US starts a war with Iran that touches off WW III. If that happens, the US government and population will both turn hysterical, and the whole country will be locked down like a prison. What was once America will become even more of a police state than it is now. Who knows where that would end?

So, one of the most intelligent things you can do is as I've been saying for years: diversify your assets and your physical presence internationally. Having some place you like to spend time off the beaten track, where you can ride the storm out, should be top priority for everyone who can afford it. Preparing for the worst at home should be top priority for those who can't.

L: Would you care to put odds on open war between the US and Iran?

Doug: I'd say it's highly probable within the next two to four years - say, between 50% and 75% - that an actual shooting war will break out.

L: Not much time to prepare. I sure hope all our readers are doing what they can.

Doug: Me too.

L: Right then. Thanks for your thoughts and guidance, Doug.

Doug: You're welcome. We'll talk again soon.