Finding A Way

Respectable follow-through buying due to short covering and a newfound enthusiasm for haven plays buoyed gold today. Gold is off its early highs for the day, however. Silver was not as lucky. It is off by more than 0.5%.

All eyes are on Russia and Ukraine. Russia insists there is a humanitarian crisis, the irony of which is that Russia created the troubles and now seeks to exploit their Frankenstein monster. If there is an actual need for humanitarian aid - food, temporary shelter, water, blankets, and the like - the usual channels ought to be utilized. Like the Red Cross.

Twenty thousand heavily armed troops generally do not carry enough food to feed 100,000 civilians who may have been displaced.

Everyone involved needs to climb down on this one if there is to be a peaceful resolution. Putin needs an out. It's time to call in international peacekeepers, which Russia and their compatriot, China, have resisted in the Security Council of the U.N.

Speaking of which, Russia, in retaliation for U.S.-E.U. sanctions has banned importation of U.S. poultry into the economically foundering country. In anticipation of a shortage, poultry prices have been rising 2 to 3% per week in Russia. Perhaps Putin should call his Chinese friends and ask them to make up the difference? U.S. producers believe that the domestic and other markets can absorb the excess production of birds. It will be a hassle, but is completely do-able.

In other international news, the crisis in Iraq is causing some support for gold, although it is dubious whether it will have a deep impact. The U.S. will not be sending ground troops and airstrikes are America's only option.

Equities continue to take their annual summer beating. All three U.S. exchanges were off about 0.5% today. European indices were down and in Asia, only the Nikkei index was up. Japan's yen and therefore its stock exchange are serving as another haven.

Action for U.S. Treasury bonds is also brisk, driving the yields down once more. In January, those yields were above 3&. They are now headed to 2.4%, an indication of the U.S.'s creditworthiness and stability.

The shift from equities is, of course, supportive of gold.

While the purchase-and-pause cycle in the silver market for industrial use is nothing new, we can look to China especially, and the United States and Japan, for trends. The strategy is to buy as much silver for factory use as quickly as possible and then pause purchases so prices can settle down again.

The other precious (industrial) metals were up significantly because Russia is a major producer of platinum and palladium.

As always, wishing you good trading,