Worry In Europe

Normal trading drove gold down, but it has been mightily propped up by a falling dollar.

The greenback fell about 0.4% against the euro today, action that helped add over $6 to gold. Investors, though, took time to gather up some profits and on the counter side, helped push prices down about $6.50. So, we're off about $1.50 for the day.

The equities markets got the jitters today as the tension in Ukraine keeps rising, like a rubber band on a model airplane being twisted and twisted until...

However, it should be noted that the commander of NATO forces in Europe said that Russia will try to use other means to destabilize and partition eastern Ukraine, taking small bites using its special forces as the tip of the spear, rather than incur the wrath of the western economies.

That means that the crisis could be interminable and all kinds of market movements could be in flux for some time. Certainly energy, which has avoided many repercussions thus far, would be a prime candidate for disruption and volatility.

This bodes well for gold and silver (the latter, finally). The Russian, Ukrainian and other parts of the former Soviet empire will be looking for places to stash all their ill-gotten dough.

All major stock exchanges except Shanghai were down today, the latter mustering only a tiny gain. Crude was up a small fraction. The interest rate of the U.S. 10-year bond was down a touch as were its counterparts in Germany and Japan.

If we were to look for a likely culprit in today's "real" trading decline in gold, we would cite the unexpectedly upbeat retail sales report in the eurozone, and much better-than-expected jobless numbers from Spain, which, along with Portugal, seems to be spending less time in the sickbed. even Greece is losing its sickly pallor.

All that prompted more risk-friendly behavior in Europe, which happened to translate into a rise in the continental currency. That pushed the dollar to 6-1/2 month lows. The lowering dollar is helping to drive the resurgence in U.S. manufacturing exports.

As always, wishing you good trading,