"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, March 4, 2014

Putin Pulls Troops - Bulls Pull Longs

Apologies for the lack of commentary yesterday - a bit busy and worn out from trying to navigate the Ukranian-based volatility.

Watching the price action in gold last evening was an exercise in the difficulties in trading gold, or for that matter, any commodity futures markets, based on geopolitical events. They can be so volatile, so unpredictable, so fluid that those who overload their account with related positions run the very real, and unfortunately, all too frequent risk of having those positions turn against them without the least bit of warning.

The yellow metal dropped rather rudely last evening here in the US ( daytime in Ukraine). Moments later the news showed up on the wire services that Putin had seemed to dismiss the use of military force ( for the moment) in dealing with the situation on the ground in the Crimea region. That sent gold bulls packing faster than one can say: "Oligopoly". Dip buyers did show up later in the session however as the situation is quite fluid.

AS a side note - buying PHYSICAL gold because one has been told that  a nuclear WWIII is just around the corner as some are now claiming (  personally I dismiss this altogether) might make sense to some but for goodness sake, do not go piling into the highly leveraged Gold futures market at the Comex based on those sorts of wild claims. You will inevitably ending up buying at the highs while the market then drops off leaving you stranded and with deep losses.

I have already gone on record in the comments section here but might as well go on record on the "front page" as stating that my suggestion is that the West should stop meddling in Russia's back yard and get behind a national referendum there in Ukraine to split the region into two parts with the Eastern half being given the option to remain under Russia's umbrella while the Western half can drift into the sphere of European influence. My guess is that such a vote would pass. Russia would retain its warm water port on the Black Sea and the Western half could then get bailed out by Germany, who would more than likely be sorry that they adopted it as Ukraine is an economic basket-case. The US itself has NO strategic interest, especially in the Crimea region.

While chart technical levels are important to watch in trading, geopolitical events tend to make buying solely on chart patterns very tricky for the reasons stated above. Let me leave it at that for now. Traders, if you are going to stick your neck out and trade this yellow metal right now, do yourself a favor and stick your mouse hand in a bowl of icy water until it goes numb and you cannot move it. There are better opportunities without the risk of staying awake for endless hours out there.

This is one time when the physical gold buyers can sleep much better. If things happen to escalate and tensions get higher, they have their metal in hand. If things calm down, they still have their metal in hand. Traders on the other hand, can easily end up battered and bruised as no one knows how these events will unfold, contrary to the many confident and reckless predictions that now abound.