Gold exploded on the COMEX open this morning, rapidly climbing up $20 an ounce and handily breaking through the $1300 mark as buy stops were triggered.
Silver was up nearly 1.5% to rise back above the $20 mark after recent weakness.
Platinum is catching some of the bounce as well, up slightly from unchanged after earlier weakness, and palladium is back to flat from yesterday’s close.
The big news is warnings from Poland about a Russian invasion of Ukraine. Yesterday, the Polish foreign minister warned of Russian troops and armor massing on the border, indicating that it was either for intimidation or invasion. Also yesterday, Russia called for emergency action from the UN on the “humanitarian disaster” in eastern Ukraine, and said it was ready to roll “aid convoys” immediately. Today, the Prime Minister of Poland warned that the risk of a Russian invasion of Ukraine has increased “in the last dozen hours or so.” If anyone knows what troops massing at the border looks like, it should be Poland.
Despite being singled out by Russia with retaliatory sanctions, Poland had led the charge for meaningful sanctions against Russia for its invasion of Crimea and support for pro-Russian rebels in eastern Ukraine. Having suffered 40 years under Soviet rule, after invasion by Nazi Germany, the Poles place deterring aggression over economic comfort.
Safe haven demand is rampant in Europe, as the Euro falls to a nine-month low against the soaring dollar, and German 5-year bonds hit their lowest yield ever, of 0.28%. U.S. Treasuries are seeing safe haven demand as well, with the yield on the 5-year down to 1.63% and the 10-year note down to 2.44%. It looks like the dollar is riding the safe haven demand on top of a robust rally that was already taking place, The fact that gold was able to gain $20/oz this morning at the same time the dollar was up .40% is a measure of how much money is flowing into gold this morning.
Wall St. opened in the red after another big sell-off yesterday. The Dow was down over 200 points before partially recovering to close down “only” 135 points, after news of the Russian build-up at the same time Moscow was loudly calling for a immediate humanitarian response. This has many thinking that Putin will invade eastern Ukraine under the guise of a “peacekeeping mission” to save the pro-Russian rebels, which have been pushed back into last stands in the cities of Donetsk and Luhansk.
To add to market jitters, reports are coming in of Yezidi Iraqis fleeing into the hills to escape an extermination campaign by ISIS in northern Iraq. The Yezidis follow an ancient religion based on Persian Zoroastrianism, and are considered infidels by the extremist terror group.
The U.S. trade deficit unexpectedly shrank, it is reported today, on a surprise drop in imports. Exports were basically flat. The reduction in imports was partly due to increased domestic petroleum production. Encouraging earnings reports in New York today are partially offsetting news that Italy has slid back into recession, and German factory orders dropped, due in part to cancellations of contracts with Russian companies and the Russian Army because of sanctions.
Mineweb reports that Russia has been aggressively increasing its gold reserves as it gears up to fight the West economically, if not militarily. Moscow bought 16.8 metric tons of gold just in June., bringing its total gold reserves to 1094 tonnes.