"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


Friday, May 2, 2014

Ukraine stirs Safe Haven Plays

Look at the following charts:

First the Japanese Yen - I will never understand how the Yen of all currencies, could be considered a "safe haven" by any standard of measurement but apparently it is.

Here is that one minute bar chart I promised you on the gold market and its goofy ride this morning.

Here is the bond market:
Do you see the pattern on all three charts? It is the same isn't it? At nearly the same time or very close to the same time, all three markets reversed course after moving lower on the payrolls number as the market's attention shifted almost immediately to the wire reports of the Ukraine conflict and that downed helicopter.
Never a dull moment when we are dealing with geopolitical events. This is why making predictions about market movements, is so foolish. No one knows from day to day what we are going to get when these crises occur. Some days the tensions ease; other days the tensions flare. Just try picking the flower petals off of a daisy - "She loves me; she loves me not" and you have about as good odds as guessing what is coming next.
Traders out there - if you are unsure about a market - you do not need to be in it trading it. Sometimes just sitting on the sidelines watching is the best place to be until you can get a sense of things. There is no sense in risking your capital on something tied to unfolding events, which can go either way.
Exercise extreme caution right now in trading gold and do not get caught with too large of a position. There are times when one needs to have more concern over how much you might lose rather than how much you might make. Remember that!


  1. And in Odessa...

    Ukraine's "Anti-Terrorist" Operation Turns Deadly In Odessa - Live Feed

    Submitted by Tyler Durden on 05/02/2014 - 10:37

    The earlier Ukraine "anti-terrorist" operation in Solvyansk has resulted in the death of at least 2 servicemen and now tensions are roiling in Odessa (with mass brawls and molotov cocktails flying) as the Ukraine government tries to live up to the IMF's demands or "fight or no money". Violent clashes have broken out at a pro-Ukraine rally in Odessa and at least one person is dead. As the live feed below shows, things are getting out of control fast. Ukraine's acting president adds:


    Ukrainian authorities have also banned Russian air companies from making flights to the eastern Ukrainian cities; and, perhaps ironically to some, Russia has called for an emergency UN meeting to discuss Ukraine's actions.


    Where the end of everything is only a matter of time.

  2. Thanks Dan,
    I dumped my shorts after your earlier post this morning. Right before the bigger pop. Saved me a pant load. Pun intended.

  3. Pick your poison; IMF, EMU, Russia, USA. The only certainty for Ukraine is that the people will be trampled and hosed off indefinitely, just like in Venezuela, Syria, Thailand, Turkey and so on an so on and like that. The guys that wrote the Fourth Turning are spot on. Stay tuned folks, as social unrest is coming to your neighborhood soon as big government pulls out all stops; sparks

    1. Hi Steve,
      What I find interesting is that everyone in the US says this has no impact on the markets here. The Ukraine is a big deal. It is right on the border of Europe and it is about to descend into chaos. The elections are supposed to be at the end of May and under what delusion does anyone think things won't devolve in the current situation.

      To say people are waiting to get short in gold sounds very risky as how can anyone think this situation really gets better with civil war the most likely outcome. I defer I truly know little about commodities but every one I have read does not seem to understand this is situation in the right context. It is going to effect things for the coming weeks. Palladium finally gave up the ghost and one wonders with gold up why?

    2. Concord; these are all tough calls and very trying times; Mark is right so far and I am wrong, as palladium holds up; always remember that in these deals that the first casualty is the truth; sparks

  4. Like my mother always says, never a dull moment! Need to update that one minute chart, cause something sure happened in the past few minutes!

  5. So the geopolitical events take precedence over the strong employment numbers today I guess? Glad I didn't short the precious metals today...Yikes. Silver up 3%, that is rare. What a fakeout!

    1. Bob;

      coming on the Friday before a weekend, no one wants to be caught short gold just in case things go haywire over the next two days when markets are closed. So shorts are covering and that has taken both the metals higher. There are many traders, some from the big houses, who are looking at these rallies as opportunities to short them. They are holding off until next week however to see how things play out over there.

      By the way, this sort of wild volatility is just more proof of what computers have done to our markets. It is also the reason I categorically dismiss the wild claims of the Flash Crash theorists who regale us regularly with one breathless posting after another blaming those sharp selloffs on some nefarious forces in cahoots with the government. The same hedge fund computers that wreak havoc on the way down, do so on the way up. It is becoming the new norm rather than the exception.

    2. Is it pretty scary that Merkel, Obama and Putin are the modern day equivilant of the 3 Stooges? I am serious; sparks

  6. Replies
    1. I'll paraphrase Mark for you:
      Gold will crash
      Miners have been sodomized for 3 consecutive years
      Mark Faber is pulling on his ponytail
      Stay in the system

  7. Hi Dan. Thanks for the blog. You are the one resource I trust for an unbiased opinion when I want to find out what is going on with commodities....Question: In your experience, how often does a geopolitical spike in prices actually hold? I think you have said in the past, as soon as the shooting starts, the price returns to trend. Just wondering from a historical perspective what scenario the goldies would need to have in order for that not to be the case and for the gains to hold....Sorry if I am re-asking something you covered already, I will try to come around more.

    As an aside, I once asked a similar question on TF metals that precipitated 100's of responses. The gist of which questioned my location on the evolutionary chain.

  8. Well, it's been an interesting day, that's for sure.

    And in the markets, my eyes tend to stick like glue to the 200 day average, particularly on a weekly close. Gold is on the verge of going back into an uptrend. That being said, it's been a maddening Whipsaw City on that front in recent weeks/months, so it might not mean a whole lot, yet.

    Watching, waiting, and enjoying the show.

  9. Going by SLV daily chart, silver had a major bollinger band squeeze that fired to the downside in the middle of April, and has ricocheted sharply three times, in sequence against bottom bollinger support, central moving avg resistance, and then finally today against bottom bollinger support again. Downside bias is maintained unless 20.00 silver is taken out to the upside with power. Is the fire from the squeeze over? Can't say for sure, but doesn't look like it.

    On the weekly, SLV has been in a tight bottleneck bollinger squeeze since beginning of March suggesting that something violent is about to happen, not too far off from now. A puke in either direction.

    Pretty schizophrenic and quite perilous in this broad trend down. Price behavior is really lending towards that gold & silver will continue to fight tooth and nail, to the very last minute, to stay above those 2013 lows, ravenously devouring any piece of news fear-oriented as a means of dodging bullets.

  10. As Rosanna Dana use to say on SNL: it is one thing or another......either Ukraine or MH370 or Korean Ferry capsizing or Cliven Bundy or The owner of the Clippers .....just cut the emotional stuff out and follow the charts ( price and volume ) a la Stan Weinstein, Marty Zweig, etc.

    You will kepe you BP low ...look into buying some coal stocks ETFs ( KOL). ACI is one that has broken the Golden Cross. Just be patient with
    GDX ( broken the Golden cross); bug jug Yellen will deliver !

  11. Unfortunately...my comment on the last thread about an over-the-top dramatic moment/masscre in the Ukraine seeming likely was just reported on as having just ocurred or just discovered.

    Via zerohedge.com

    UPDATE: Up to 38 reported choked to death in the burned buildings of Odessa.



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