The Ukraine Migraine

Even without the Labor Day holiday this Monday in the U.S., Ukraine would be giving precious metals traders big problems. The key is that no one can decide whether it's a big problem or just a big headache.

It seems that every week we have a new normal in the eastern part of the country and just when it seems to have been resolved, Putin sticks in his royal tsar scepter and stirs the ashes. Then Ukraine, which by this time is no doubt receiving plenty of western military materiel, steps back up and blows those embers into a fire that Russia can't resist tampering with.

Anyone's guess is as good as ours, but the problem is looking very real now and will get hotter before it gets colder. There are also more reports that, for whatever reasons, Russia is routinely violating Finland's airspace, as well as those of the Baltic states. Finland is not a treaty member of NATO but is de facto a member because of its ties to Sweden.

Finland generally runs a big positive balance of trade account with Russia and is at a complete loss as to why the bear is acting so irrationally. (In June, Finland was $1.3 billion to the good with Russia in trade. Maybe Putin wants to slip out of the debt because of his country's failed economic system?)

Why the trouble in Ukraine did not yield more support for gold and silver is not much of a mystery once we understand that Labor Day is one of the more heavily observed Monday holidays on the American calendar. Of course, labor is no longer celebrated in the U.S. very much. This Monday is seen, if not as the unofficial end of summer then as a second and final chance to rock the good weather. (Many millions of school kids have already returned to school and see the chance to re-open their break.)

The holiday has a tendency to render all markets rudderless except for crude, which is a 24/7/365 market. Oil never sleeps. It lived up to its reputation today by jumping 1.46%.

The jump can be pinned on Ukraine's problems but even more on sentiment in the U.S. The Institute for Supply Management in Chicago said its biz barometer zoomed to 64.3 this month from 52.6 in July. It was the biggest monthly point gain on that index since July 1983 and pointed to continued robustness in the manufacturing sector.

That good news also sent the dollar up and the euro down. The dollar's strength is accounting for all of gold's loss today.

Happy Labor Day to all. Say a prayer for the hard-working people. Raise a glass to the salt of the earth. One-third of all restaurant workers in the United States live below federal poverty standards.

As always, wishing you good trading,