Baltic Dry Index. 1258 +08
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“I
know not with what weapons World War III will be fought, but World War IV will
be fought with sticks and stones.”
Albert
Einstein.
This morning it is all about what happens next in
the Ukraine. Will President Putin be satisfied with just returning the Crimea
to Russia, or will other events in western Ukraine force the south and the east
of the Ukraine to opt for Russian protection too? At this point it’s far too early
to tell, but it’s mot far too early to tell that the Kiev coup “government” is
effectively bankrupt and in no financial position to fight a war with Russia.
Is the EU or America really going to finance the western part of the Ukraine of
dubious legality to make war on the south and east and Russia?
Despite all the threatening talk coming from the
west, missing a June G-8 meeting in Sochi, and perhaps cancelling the Sochi
para-Olympics due to start at the end of the week, is about all that the west
can do, short of joining one side in a Ukrainian civil war. But that is the
same as declaring war on Russia. Is America and Germany really prepared to push
events that far? And what if they did. What would be Russia’s pushback be in
Afghanistan, Pakistan and Iran?
Stay long fully paid up physical precious metals.
Our world stands at the brink of a fresh European war this week, or else of
having the west’s bluff called and trumped.
“God
created war so that Americans would learn geography.”
Mark
Twain.
Putin Grab for Crimea Shows Trail of Warning Signs West Ignored
Mar 2, 2014 8:54 PM GMT
Western leaders from President Barack Obama
to Chancellor Angela Merkel are telling Russia not to
violate Ukraine’s
sovereignty. Vladimir Putin’s response as he prepares for military
conflict: What about ours? Putin’s been cautioning the U.S. and other North Atlantic Treaty Organization states for at least six years not to impede Russian interests in Ukraine, particularly in the Black Sea peninsula of Crimea, home to its largest overseas naval base.
Putin told a closed NATO summit in Romania in 2008 that the military alliance was threatening Ukraine’s very existence by courting it as a member, according to a secret cable published by Wikileaks. Putin said Ukraine’s borders were “sewn together” after World War II and its claims to Crimea, which belonged to Russia until Nikita Khrushchev gave it to Ukraine in 1954, are legally dubious, Kurt Volker, the U.S. ambassador to NATO at the time, said in the cable.
Four months later, Putin demonstrated his willingness to back up words with actions by sending Russian troops to war against Georgia over two Russian-speaking regions seeking independence.
Now, in Putin’s eyes, it’s the U.S. and the European Union who are pushing Ukraine to the brink of armed conflict by supporting the overthrow of Russia-backed President Viktor Yanukovych. Elected four years ago, Yanukovych was deposed by Ukrainian lawmakers on Feb. 22 after clashes with protesters left at least 82 people dead, the worst violence the country has witnessed since World War II. Russia’s Foreign Ministry called it a “coup” by “fascists” carried out at Russia’s expense.
More
Russia Gas Threat Shows Putin Using Pipelines to Press Ukraine
Mar 2,
2014 8:14 PM GMT
OAO
Gazprom (OGZD)’s threat to end natural gas discounts for Ukraine adds to
the financial burden on the near-bankrupt government in Kiev and makes Europe’s
energy supply part of the escalating crisis. Russia’s gas-export monopoly said on March 1 it may end last year’s agreement to supply Ukraine at a cheaper rate unless it’s paid $1.55 billion owed for fuel. It’s the first time since the overthrow of pro-Moscow president Viktor Yanukovych last month that Russia has directly used its position as Ukraine’s dominant energy supplier to pressure the new regime.
-----Because Ukraine hosts a network of Soviet-era pipelines that carry more than half of Russia’s gas exports to the European Union, any disruption of supply puts the region’s energy security at risk.
Gas debt “is a traditional Russian move to pressure Ukraine,” said Mikhail Korchemkin, head of Malvern, Pennsylvania-based East European Gas Analysis. “In the past decade the Kremlin used the gas tap as a tool of political pressure on the former Soviet republics.”
The interim government led by Arseniy Yatsenyuk can little afford to meet Gazprom’s demand for back payment as it tries to negotiate a $15 billion bailout with the International Monetary Fund. Ukraine, which uses more natural gas than France, gets more than half its supply from Russia.
More
Ukraine Tension Seen Stoking Oil, Gas Prices on Supply Risk
Mar 3, 2014 3:18 AM GMT
Oil and natural gas rose amid investor concern that escalating geopolitical
tension over Ukraine
could curb energy supplies. Brent crude advanced as much as 2 percent to $111.24 a barrel on the ICE Futures Europe exchange in London today. Gas futures jumped as much as 2.8 percent to $4.736 per million British thermal units in electronic trading on the New York Mercantile Exchange, after sliding 25 percent last week.
“The market will be incredibly nervous, and that caution should push prices higher,” Ole Hansen, a Copenhagen-based strategist at Saxo Bank A/S, said yesterday by phone before the resumption of trading today.
----Wholesale gas costs jumped in January 2009 after Russian supplies via Ukraine halted amid a dispute over prices and transit terms. Europe’s biggest gas stockpiles for at least four years are helping damp the impact of any potential disruption.
“If there were a disruption, and there’s no sign of one yet, Europe is in a better position to handle such a situation,” Robin Mills, the head of consulting at Manaar Energy Consulting and Project Management, said yesterday by phone from Dubai. “The Europeans have made a big push to develop gas storage and strategic interconnections between countries,” including the Nord Stream pipeline from Russia to northern Germany, he said.
More
Gold Climbs as Russian Seizure of Crimea Increases Haven Demand
Mar 3, 2014 3:09 AM GMT
Gold rose as tension in Ukraine exacerbated by Russia’s seizure
of Crimea boosted demand for a haven, with assets in bullion-backed
exchange-traded products posting the first monthly increase since December
2012. Bullion for immediate delivery climbed as much as 1.4 percent to $1,344.87 an ounce and traded at $1,342.50 at 10:57 a.m. in Singapore. Prices advanced 6.6 percent last month after a 3.2 percent gain in January, and reached a 17-week high of $1,345.46 on Feb. 26. Holdings in ETPs expanded 0.4 percent to 1,745.99 metric tons in February after contracting last year for the first time since the first product was introduced in 2003.
Bullion is the biggest gainer in 2014 after coffee and lean hogs on the Standard & Poor’s GSCI Index of 24 commodities as unrest in Ukraine and a slowdown in China hurt emerging-market assets and boosted demand for a store of value. Gold rallied from a 28 percent drop in 2013 as U.S. economic data from factory output to retail sales missed estimates just as the Federal Reserve started to scale back asset purchases.
More
Asia Stocks Fall Amid Ukraine Tension, China Economy Data
Mar 3, 2014 4:46 AM GMT
Asian stocks fell and measures of equity volatility surged amid escalating
geopolitical tension over Ukraine and after an official gauge of Chinese
manufacturing dropped to an eight-month low. BHP Billiton Ltd. (BHP), the world’s largest mining firm, lost 1.1 percent in Sydney as raw-materials shares posted the largest drop among the regional index’s 10 industry groups. Mazda Motor Corp., an automaker that gets 73 percent of sales overseas, tumbled 4.1 percent in Tokyo as the yen touched an almost one-month high against the dollar.
China’s Shanghai Composite Index (SHCOMP) rose for a fourth day amid speculation lawmakers will announce measures to reform state-owned companies during an annual meeting this week.
The MSCI Asia Pacific Index slid 1 percent to 136.52 as of 12:16 p.m. in Hong Kong. Futures on the Standard & Poor’s 500 Index lost as much as 1.1 percent, the biggest decline in a month, after the equity gauge rose to a record at the end of February.
----“The immediate concern for markets is the possibility of escalation,” Ric Spooner, Sydney-based chief analyst at CMC Markets, said in an e-mail. “While most consider it unlikely that the West will be drawn into this conflict other than diplomatically, some hedging and de-risking of portfolios is not unusual in these situations.”
----China’s Purchasing Managers’ Index fell to 50.2, the lowest since June, the National Bureau of Statistics and China Federation of Logistics & Purchasing said March 1 in Beijing.
Japan’s Topix index lost 1.7 percent as the yen rose 0.4 percent to 101.42 per dollar. Mazda slid 4.1 percent to 469 yen, while Nissan Motor Co. declined 2.2 percent to 891 yen.
More
If the Ukraine does default later this week, I hope
that someone is standing by to bailout already failing Italy’s banks. Italy’s
banks seem to have been the Ukraine’s second largest lender behind Russia’s. Oh
what a tangled web we weave.
In other news, drought wracked California is hoping
for another El Nino.
El Niño may return late this year, experts say
Scientists say their observations and computer models show signs of El Niño's return, which could mean more rain for California. Or not.
March 2, 2014, 8:15 p.m.
El Niño, nature's most powerful influence on weather around the globe, has been in a lull for two years. But indications suggest that could change as early as fall.
Since spring 2012, the eastern tropical Pacific Ocean has not warmed enough to create an El Niño. Nor has it cooled to form a La Niña. Instead, it has lingered in an in-between state some experts call "La Nada."
Though it is too early to predict with much certainty, scientists say their observations and computer models show increasing signs of El Niño's return, which might portend more rain for California.
"We're getting multiple indications, and we're kind of due for one," said Gerald Meehl, senior scientist at the National Center for Atmospheric Research in Boulder, Colo.
An El Niño cycle begins every two to seven years, when weak trade winds in the Pacific allow warmer water to pile up along the west coast of South America. That generates storms in the tropical Pacific farther east than usual, changing winds and altering precipitation patterns across the globe.
During El Niño conditions, the jet stream usually dips south over North America, steering storms to the California coast and across the southern U.S., while La Niña is associated with drier conditions, especially in the interior Southwest.
If El Niño reemerges, experts say, it could tame the Atlantic hurricane season, bump up global temperatures in 2015 and potentially bring more rain to parched California by next winter. But such conditions are not necessarily the answer to drought, experts warned, because they don't always result in wetter weather.
"Only the really big ones do," said Michael Anderson, California's state climatologist.
Of the six winters with strong El Niño conditions since 1950, four produced above-average rainfall in California, according to records from the National Climatic Data Center of the National Oceanic and Atmospheric Administration. However, in the winters during two strong El Niños in 1965-66 and 1991-92, rainfall was below normal.
For now, the U.S. government's El Niño alert system remains inactive, but the long-term forecast has inched upward in recent months in favor of El Niño.
More
“War is peace. Freedom is slavery. Ignorance is strength.”
George Orwell.
At the Comex silver depositories Friday final figures were: Registered 50.91 Moz,
Eligible 131.92 Moz, Total 182.83 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Bloomberg on just why we may stumble our way
into war. With the UK rapidly downsizing its Army and all too likely to split if
London joins in a non NATO war, the heavy lifting in this European war will
fall on to America, Germany and Poland. Euros anyone?
“It
is forbidden to kill; therefore all murderers are punished unless they kill in
large numbers and to the sound of trumpets.”
Voltaire
The New Great Game: Why Ukraine Matters to So Many Other Nations
Ukraine
doesn’t seem like the kind of place that world powers would want to tussle
over. It’s as poor as Paraguay and as corrupt as Iran. During the
20th century it was home to a deadly famine under Stalin (the Holomodor,
1933), a historic massacre of Jews (Babi Yar, 1941), and one of the world’s
worst nuclear disasters (Chernobyl, 1986). Now, with former President Viktor
Yanukovych in hiding, it’s struggling to form a government, its credit rating
is down to CCC, a recession looms, and foreign reserves are running low.
Arseniy Yatsenyuk, head of the opposition party affiliated with former Prime
Minister Yulia Tymoshenko, said on Feb. 24 in Parliament, “Ukraine has
never faced such a terrible financial catastrophe in all its years of
independence.”
But Ukraine is also a breadbasket, a natural gas chokepoint, and a nation of 45 million people in a pivotal spot north of the Black Sea. Ukraine matters—to Russia, Europe, the U.S., and even China. President Obama denied on Feb. 19 that it’s a piece on “some Cold War chessboard.” But the best hope for Ukraine is that it will get special treatment precisely because it is a valued pawn in a new version of the Great Game, the 19th century struggle for influence between Russia and Britain.
Russia, which straddles Europe and Asia, has sought a role in the rest of Europe since the reign of Peter the Great in the early 18th century. An alliance with Ukraine preserves that. “Without Ukraine, Russia ceases to be a Eurasian empire,” the American political scientist Zbigniew Brzezinski wrote in 1998. Russian President Vladimir Putin wants Ukraine to join his Eurasian Union trade bloc, not the European Union. Russia’s Black Sea naval fleet is headquartered in Sevastopol, a formerly Russian city that now belongs to Ukraine. Last year Russia’s state-controlled Gazprom (OGZPY) sold about 160 billion cubic meters of natural gas to Europe—a quarter of European demand—and half of that traveled through a maze of Ukrainian pipelines. Those pipelines also supply Ukrainian factories that produce steel, petrochemicals, and other industrial goods for sale to Mother Russia. “Ukraine is probably more integrated than any other former Soviet republic with the Russian economy,” says Edward Chow, a senior fellow at the Center for Strategic and International Studies in Washington.
China looks to Ukraine as a
secure source to satisfy its ravenous appetite for food and energy. It’s
lending the country billions of dollars to upgrade farm irrigation and develop
coal gasification. In December, Yanukovych and Chinese President Xi Jinping
gripped and grinned while signing a “treaty of friendly cooperation.” According
to the official China Daily, in addition to agriculture and energy, they
agreed to collaborate on infrastructure, finance, high-tech, aviation, and
aerospace.
Western nations want to keep
Ukraine from becoming a failed state and to discourage Putin from retaking the
nation by force. The U.S., busy with conflicts from Syria to Afghanistan,
regards Ukraine as mainly the EU’s problem. The EU hopes eventually to welcome
a stable Ukraine as a member, but not yet. On Feb. 25, EU policy chief
Catherine Ashton stressed to reporters “the importance of the strong links
between Ukraine and Russia.” Even Poland, which identifies with Ukraine because
it too was once under the Soviet thumb, isn’t prepared to rescue its eastern
neighbor unconditionally. “Poland will not sweat its guts out” providing
foreign aid that just props up oligarchs, Prime Minister Donald Tusk said on
Feb. 24, according to the New York Times.
More
“The
supreme art of war is to subdue the enemy without fighting.”
Sun
Tzu, The Art of War
The monthly Coppock Indicators finished February.
DJIA: +203 Up. NASDAQ: +353 Up. SP500: +255 Up.
The new Fed bubble continues, but the DJIA and S&P seem to be running out
of momentum.
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