Probability, Predictability, Price and Forecasting

March 21, 2014

Investors and observers watching the drama unfold in the Ukraine should not be surprised at the short price action of the precious metals, mainly gold and silver. Throughout the crisis (and as matter of record with practically every other crisis) the metals are driven down by a system that becomes more sophisticated each day.

The ramifications and consequences of events in the Ukraine and Crimea are dire and easy to imagine. These ramifications radiate and dovetail with the multitude of other potential and current hot spots in other energy strategic areas of the world.

Conflict creates palpable fear. Fear creates the need for security, confidence, and assets that are unencumbered by the machinations of the various parties involved. The precious metals have served as that anchor for the millennia.

What makes these events particularly unique is that the conflict has arisen in the full embrace of the fiat age - and at the end game of the financialization that came with it. The scale is unprecedented in history. With the extinguishing of risk comes the exceedingly fragile state in which we find ourselves, that overnight, a simple trigger could set ablaze a paper derivative disaster that creates a world wide tsunami.


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Peru became the world’s largest producer of silver in 2012.