A merchant trader in the Gulf is a story that will end with the 1982 Kuwait stock market crash when the Souk al-Manakh plunged the oil rich nation into near economic disaster. The lead up to the Kuwait market crash of 82 starts in the 1930's when the Persian Gulf pearl traders began to amass fortunes in oil riches.

The real story starts much earlier and goes all the way back to the Bronze age when the Arabian peninsula became a merchant force to contend with.

For millions of years there have been treasures hidden in the ground and in the sea of the the Arabian peninsula waiting patiently for the spirit of the merchant trader to shift. Six thousand years ago that spirit was witnessed when merchant trading posts and trade routes between peninsula dwellers and other early civilizations situated where India, Egypt, and Iraq are today, began to form. Camel traders and pearl traders, moved about in caravans and on sailing vessels moving from one trading post to the next and loading up on goods for import while dumping goods for export. Copper and raw materials were the peninsulas' preferred commodity of trade. These were the goods others looked for in them. The resources allowed them to thrive, sometimes in areas that seem hospitable only to the beast of burden.

In the 1800's Kuwait was beginning to have a unique personality. But the black gold which ran in the veins of the earth and that settled in dark pools beneath the sands of the inlands and the waters of the gulf continued to be no better than a pitch for oiling caravan wagon wheels and for lighting lanterns. It may even have been used occasionally for remedial purposes. It was the pearl trader of Kuwait who's goods were so highly praised by other merchants.

In the 1930's this story takes an abrupt turn. The industrial revolution has taken hold of the world and gas powered engines which require refined petroleums are coming off assembly lines in record numbers even after massive fortunes are lost in 1929 in America and around the world.

..oil drillers and oil riggers can't rush fast enough towards the peninsula in order to tap the pipes of any gusher they can find. The black gold rush is on and in a similar way that the California Gold Rush had taken the American continent to new commodity trading heights in the 1800's and made men super wealthy nearly overnight, Kuwaiti sheiks and merchant business men everywhere in the peninsula give rise to some of the wealthiest families on the planet.

It's full steam ahead, but not without political resistance for Kuwait for the decades ahead. Kuwait becomes a major stock exchange and are known as the KSE. But the oil rich sheiks play a game of their own in a secondary stock market in an underground garage which once was the site of a camel trading outpost. This camel trading outpost becomes known as the Souk al-Manakh.

The amount of money traded underground by the families becomes so vast that it is claimed to be in the top five centers for international exchange of commodities and other goods in the world by the 1970's when oil assets run into some hard times. Until the 1970's oil prices had ranged but never moved dramatically. This made oil stocks and oil futures fairly dependable hedging tools and as such could leverage the buying of commercial real estate and private real estate and other goods and services. However the three week Yom Kippur War which ended on October 22, 1973 caused a ranging oil prices to destabilize and the oil quotes trended out of range and within a few years merchants of oil were fetching double what they had in previous years for their commodity. Times were good for the oil rich nations.

This spike caused a bubble and the bubble looked like it would burst in 1973 and the Souk al-Manakh merchant oil traders were dumping everything they had and at any quote they could get. The Kuwaiti government used bail out techniques of providing liquidity to a failing market to alter further depreciation of the country fortune and the show moved on.

But the next chapter in the merchant trader of the gulf's life was not going to be pretty. The Iranian Revolution and the follow up Iran/Iraq war saw oil quotes almost double up again in a second wave of oil madness which peaked in the late 1970's. Without much warning the bubble did burst this time and no one had the liquidity or was willing to provide a parachute in order to put a stop to the sellers oil market. Much of this oil money was was traded in the underground Souk market in Kuwait. This was the Kuwait stock market crash of 1982. In the years leading up to the end of the decade oil stocks and commodities were once again fetching quotes ranging 15 and 30 dollars and that brought the oil merchant trader to the end of the millenium.

Waves of temperament provided by fear and greed are the product of an al-Manakh. The camel is just part of the caravan and only worthy to the Souk or merchant until it too most be disposed of.

A great camel is a good camel and a companion until it too must be sold at whatever price.

If you enjoyed this story called A Merchant Trader in the Gulf then perhaps you will enjoy another one called

The merchant traders almanac where I look at the development and potential of a book of wisdom which might be useful in helping investors. It might even help you with your camel problems....coming soon