Betting on War's Outcome? 1991...

Betting on War's Outcome? 1991 Clues May Be Misleading:

Gold hit $418.10 an ounce on Aug. 24, 1990, three weeks after the Iraqi invasion of Kuwait, fell and then worked its way back to $404.50 on Jan. 16, 1991, the day before the air war began. By February, when the ground war began, gold was down to $358.30 an ounce; it went as low as $345.10 in September and finished the year at $355.20. From the August high there was a 17.5 percent fall to the September low.

Oil starting surging on the report of the Iraqi invasion, reaching $40.42 a barrel on Oct. 11. It fell and then bounced back to $32 a barrel on the day before the war began. Then it plunged, reaching $17.91 in February, before rallying a little to end the year at $19.12 a barrel. From the October peak, oil fell 55.7 percent to its February low.

But it is likely that gold, which closed at $363 an ounce on Tuesday, and oil, which ended at $35.44 a barrel, will perform differently this time because the aftermath of a war - even with a quick victory led by the United States - will be different than in 1991.

If the United States goes to war without the support of France, Germany and Russia, the geopolitical scene would remain tense after the war. There is also the threat of retaliatory terrorist attacks. The huge cost of rebuilding Iraq and putting an acceptable government in place could make projected record budget deficits in the United States even bigger. And there are the Iraqi oil wells and what Mr. Hussein decides to do with them if his country is attacked. Will they be safe? Will they be on fire?