More Of The Same? Not Quite.

The worry of war in the Ukraine/Crimea region is not what is specifically on the minds of safe haven investors right now. This is not to say that war cannot beak out should either the Ukrainians or Russians lose their heads.

What is on their minds is the longer-term impact of economic issues that will inevitably flare up once the dust settles from some sort of union between Russia and Crimea. The U.S. and Europe cannot let the geopolitical challenge go unanswered. If we were the Russians, we would be very concerned about the deliberateness with which the allies are arriving at a plan.

Some form of sanctions, tightening of Russian credit, an increased military presence in Ukraine, Poland, Romania, Bulgaria and the Baltic states are available options. Turning the tables and cutting down on natural gas purchases from Russia may also be in the tool box.

The Europeans have to drive this boat because they have much more to lose than the United States. And they are very close to the physical locale.  

A better strategy for the West right now would be to ramp up support for some reasonable faction in Syria, make overtures to other former Soviet states and to pressure the Chinese and Indians to come down harder on Russia.

The hypocrisy of those two "non-aligned" countries is absurd and an insult to civilization.

China has on its hands Tibet, the Uighur region, Hong Kong and other areas only lightly glued to their central government. India, of course, has Nepal, Kashmir, Bhutan, the eastern potrion of the country beyond Bangladesh, and the borderlands with unpredictable Pakistan. You would think that they would be very wary of the Crimean precedent.

And, for good or ill, this gives the United States a free reign again in Central America and Venezuela, not a pleasant thought for either Russia or China, both of which had growing stakes there. China is attempting to finance and build a canal through Nicaragua, but most definitely needs American approval. Indecisiveness regarding Ukraine's problems will not dispose the United States to accept the Chinese project.

Additionally, we believe that this will retrench Japan, the Philippines and Vietnam regarding the disputed islands in the eastern Sea of China. Japan, interestingly enough, has said it does not require assistance from the United States or Australia to deal with the Chinese. Nothing more was said so it tends to raise an eyebrow.  

Turning away from geopolitics, in a week we will hear what the FOMC has to say about tapering and the state of the economy in the U.S.

Analysis and worry about the meeting will begin to shove other news aside regarding gold and silver. Forewarned is forearmed.

As always, wishing you good trading,