It is hard for people in the US and most of Europe to understand government corruption.
Here some nice favours often ends up putting a public servant in jail. Outside this ivory tower many countries are little more than family businesses or power structure built to pillage a country.
Inefficient self serving government is one thing, but when the state is there to steal the assets of the country the dynamic is a world away.
I don’t say this to troll the US tin-foil wearing extreme libertarians who believe the US Government is the spawn of Satan, but to point out a key investing signal.
I bought Gold recently because technically the charts said “gold is going up.”
I didn’t know why.
However someone did.
Those someones were most likely in Russia.
They knew they were going to get nasty over Ukraine so they bought gold.
Why wouldn’t they?
Of course you would think that was wrong, but you have to remember a place like Russia has at best a very sketchy concept of the rule of law and that faint grey doddle gets even fainter the higher up you go in the power structure.
East European apparatchiks steal billions. It’s the norm. It would be considered almost unbelievable if a powerful person was up to his ears in the sort of thing that would have you thrown in the pen forever in the US.
So consequentially you can look to gold and Oil as a forward indicator of any global political problem where certain players have no qualms in front running their own actions.
So right now, if gold is tell us anything, things aren’t improving in the Ukraine/Russia incident.
As Gold rises so will the escalation of the “conflict” rise. Sharp and or unexpected moves will be followed by news, so don’t expect to have this the other way around.
Yet the important variable to consider is just the very corruption that is driving gold before the news.
Russia and for that matter Ukraine are run by kleptocrats whose billions are salted away all over the world. While they may be sore from being fleeced in both Iceland and Cyprus they still have old fashion fortunes stashed away, the looted wealth of a once superpower, in international locations from one end of the globe to another.
A really serious conflict would wipe these fortunes out.
As such unless something exceptional were to happen, Putin cannot afford to cross too many lines.
If he does property prices in London, New York, and other Russian playgrounds and tax havens around the world will plummet and Gold will go ballistic.
Gold will go ballistic first before the bad news hit.
But Russians aren’t that stupid. Or at least we can hope they aren’t. They have everything to lose, at least the hard “earned” wealth and lifestyles.