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The Ten Eye Opening Observations About The Move In Gold On Potential Invasion Of Ukraine By Russia

There is a big dichotomy going on in the gold market related to frenzy about potential invasion of Ukraine by Russia.  Here are ten observations.  The annotated tick chart of gold futures will help you follow along.


Please click here for a large chart.

  1. Gold has moved up very strongly on frenzy being stirred by the media based on a comment by Polish official yesterday that Russia will invade Ukraine.
  2. Ask yourself this question, "How likely is it that Russia will share its plans ahead of time with an official of Poland knowing that Poland is now a member of Russia's arch rival NATO?"
    From our sources, we have not been able to determine any record that gives special credibility to this Polish official.
  3. Russia is a big supplier of oil and gas to Europe.  Why is oil falling if someone knows that Russia is going to invade Ukraine?
  4. Investors in Asia and Europe tend to be more knowledgeable about Russia than investors in North America.
    No significant buying has been seen in Asia or Europe.
    Almost all of the buying is coming from North America.
  5. Our algorithms have detected massive short squeeze.
  6. Our algorithms have detected light selling by Smart Money every time gold spikes over $1309.
  7. It is important to understand about media that it needs sensational headlines; TV shows want ratings, websites want page views, and newspapers want subscribers.
  8. Polish foreign minister, Radoslaw Sikorski, did not make a definitive statement that Russia was going to invade Ukraine.  Here is his exact statement: "There are several battalion groups there. There is a large concentration of military hardware there. These things are being done just to exert pressure. Or to enter." There is nothing new in this statement.
  9. Junior miner ETF GDXJ, which has recently been a leading indicator of gold price movement is seeing heavy money outflows for the last hour.  When money flow is negative and the price is rising, this is a negative divergence.

    Also instructive is to see smart money actions today in various precious metal stocks and ETFs.  Please see the table.

SYMBOL  

SMART MONEY BUYING IN MILLIONS OF $

SMART MONEY SELLING IN MILLIONS OF $

GLD

1.1

SLV

7.8

ABX

1.51

NEM

11.3

GDX

0.1

GDXJ

38.6

GG

5.4

SLW

0.2

PAAS

0.1

CDE

0.4

Smart Money in our parlance is the ultra sophisticated money that knows more, that knows early, that has tremendous amount of analysis powers, and that has extensive resources.

  1. Silver is seeing light money outflows.

Gold is driven in the short-term by sentiment.  Sentiment is often oblivious to logic and rationality.  None of the foregoing means that gold cannot go up from here or that Russia will not invade Ukraine.

The ten observations are simply meant to remind investors that both  risk and reward should be taken into account when making an investment.  The foregoing observations show that there is a high risk in the very, very short-term in this gold up move. 

Full Disclosure:  Subscribers to The Arora Report are provided precise buy zones and sell zones as appropriate.  Further, subscribers to The Arora Report may undertake short-term trading positions in addition to the very long-term generational opportunities.

By Nigam Arora
Chief Investment Officer
Courtesy of www.TheAroraReport.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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