Gerardo Del Real
Feb. 24, 2022
Russia has decided to launch a full-scale attack on Ukraine.
I’m no foreign policy expert — and didn’t get a degree overnight — so I’ll spare you my thoughts except to say my thoughts are with the people in Ukraine.
The market impact has been immediate.
Natural gas prices in Germany are up 50%... in one day.
Gold surged to $1,974 before retreating closer to the $1,900 level.
A quick note on gold:
Clearly it’s breaking out. But for those of you new to trading gold on fluid geopolitical events, you should expect $50 moves to the upside AND the downside.
You should be buying the moves to the downside if you’re waiting to add to your gold position.
These moves will be exaggerated by capital late to the hedge party looking to add gold.
And the up moves will be countered by investors needing liquidity to cover leveraged longs that are blowing up. So some will have to liquidate one of the few assets performing well during this sell-off.
Short oil? That’s up 6%.
Tried buying the dip in the S&P? Oops.
Crypto as a hedge? Not right now.
Thought the dollar was overbought? You’ve just been reminded that the dollar remains the cleanest dirty shirt in the currency basket.
A volatile 2022 just got more volatile. We’ve been warning and positioning for this for quite some time.
I will share one final thought.
The President's defense budget request for the fiscal year 2022 is $715 billion. It was $705 billion last year.
If we’re going to justify insane defense budgets every year by saying we are the leaders of the free world and must be prepared to act in the face of a threat to that free world, then what are we going to do?
If the answer is this isn’t any of our business then slash the budget and reallocate the funds for more productive means. And quit the posturing.
Something has to give.
Let's get it!
Gerardo Del Real
Editor, Resource Stock Digest