Traders of precious metals will be feeling uneasy this week. Gold prices fell quite dramatically last week following the Crimean referendum, but tensions in the Ukraine were pulled close to breaking point over the weekend and will inevitably upset the markets.
If the there was nothing to influence the markets everybody would know which investments were best and everybody would make a fortune, so politicians play war games every now and again to keep things interesting.
After Russian Premier Vladimir Putin annexed Crimea last week he said he was not interested in attacking Ukraine. This week he has taken command of Ukraine military based and lined troops up along his neighbour’ s eastern border.
The supreme allied commander of NATO, General Philip Breedlove, has warned that Putin in targeting Moldova next.
This of course is Putin’s responses to the sanction that the EU and US have imposed on Russian officials and other supporters of Putin. Visa and MasterCard have pulled out of two of the country’s leading banks and have had to all but scrap their plans for international trade this year.
Putin options over Crimea are to fight or collapse the market. Giving into the US sanctions would be a sign of weakness and as head of state he cannot let that happen. He certainly cannot give Crimea back, and given that 90% of the peninsula voted they wanted to join Russia it hardly seems fair for Ukraine to ask for the land back.
Of course, Ukraine could face up to the misgivings with Crimea and just let it go – but the US senate will not let happen. Crimea is a strategic naval region which is currently owned by Russia. The lease however runs out in 2042, after which time the US as allies of Ukraine would control the naval base. Another reason why Putin will not give Crimea back.
We are not sure why Putin has ordered troops to marshall Ukraine’s eastern frontier, but Tony Blinken, deputy head of US National Security seems to thinks “it’s possible that they’re preparing to move in.” After last week’s referendum the audience left the political theatre and gold prices fell. This week they will be back for the second half.
Gold likely to go up
With the global market strengthening, gold prices are expected to fall, but with the tug-o-war over Crimea, the rope is tightening. The threat of war will push gold prices back up – but traders may bide their time before hitting the panic switches. But gold prices are not likely to continue a downward trend either.
It would be a shrewd move for traders to balance precious metals out, but gold might get pushed back towards $1400 where the big investment banks like Goldman Sachs want it. Expect steady increases until the Crimea crisis blow over.
If world leaders cannot come to a sensible decision and war breaks out, head over to coininvest.com and buy as much gold as you can afford, because prices will never be this low again.