Guaranteed Crisis
Our research indicates that Russia will make its move after Inauguration Day (Jan. 20). Most likely, it will happen during the week between Feb. 13 and Feb. 20. Here's how it will go down:
• Russia will double gas prices for Ukraine, quoting supply and demand. Ukraine will be unable to pay.
• Gazprom immediately will cut off natural gas deliveries.
• Ukraine's already damaged economy will grind to a standstill.
• Kiev will be forced to help itself to "transit gas" destined for Europe - and threaten to cut off the pipeline that connects Russia with the European Union.
The most powerful player in this brutal game of chess will be Gazprom. Gazprom is a company so powerful it's sometimes called a "state within the state". Its former Chairman of the Board, Alexander Medvedev, is now the Russian president. The company was even granted the right to form its own armed security force to safeguard its pipelines against "sabotage and terrorist acts" that could disrupt gas supplies to Europe. Gazprom's "kontraktniki" are an army of mercenaries, recruited from veteran Russian special forces. They have tanks. They have helicopters. And they're backed up by the conventional and nuclear firepower of the Russian military...
Who else to come out swinging from an armed confrontation? But there's a hidden agenda behind this whole scenario... Russia is making the ultra long-term play. A few million in stock valuation lost today could be worth trillions in the long run: Russia wants to re-nationalize Gazprom at the lowest possible cost to the Russian government... and at the expense of Western shareholders! When they sell in a panic, Russia will buy at fire-sale prices.
Ticking Time Bomb
If Ukraine moves to block the pipeline, Gazprom's shock troops will move to "protect" their business interests. Gas prices will go through the roof the moment the first Russian tank rumbles across the Ukrainian border. And Russian stocks will collapse as investors pull out in a panic. Just as they did in August, when Russia invaded Georgia. Just as they did last October.
When that happens, Gazprom share prices will get destroyed. Don't be surprised if their U.S.-traded ADRs will lose 20%... or even 50%... in a single trading day. That's exactly the moment the Russian government is waiting for: As private investors bail out, the Kremlin will step in... graciously buying up shares for kopeks on the ruble. Hedge funds, institutions and private investors will lose billions