Tuesday 8, March 2022
Wrap
Prices fluctuated. Zelenskyy said that Ukraine did not want to join NATO. I think that, in fact, he reiterated this, as it was part of the Minsk Accord, signed in 2014. I may be wrong here, but I have read that the idea that trends should reverse because this is said is simply to mis-read the situation. I really have no clear idea of what is going on, but my gut tells me that it’s still bullish for commodities. Ukraine and Russia are hugely important in supplying the world with commodities, and the supply has stopped. Putin has actually banned the export of raw materials for the remainder of 2022. This has to be positive, although Brent dropped a couple of dollars intra day, ending up $5.63, and silver and gold took a breather. A lot of stops will have been hit, which will have suited the big players.
So far the oil companies stock prices have been relatively muted. Exxon is up 46%, but given how geared its profits are to the long-term oil price, this still factors in some serious falls over the next few years. Personally, I have never bought the “stranded assets” hypothesis, and so far I have been right. But with enough political will, we can stop using hydrocarbons. I believe that the pain would be extreme, but the pain of war is extreme too, and countries go to war.
The SPX 500 is still up 7.2%, year on year. I can’t see it holding onto these gains, especially with major FAANG stocks falling so fast: FB (now called Meta) is down from $340 to $19 since the start of the year. The stock that will signal the final capitulation is $TSLA. Amazingly, it’s up 22% y-o-y. When it starts to sink steadily, the game will be up.
Silver is notoriously volatile, but it seems to be in a steady trend now: up 13% over a month, but only ~2% over a year. People are looking more closely at derivative exposure, such as $SLV, but some folk think that it is not properly backed by the physical commodity:
A kind reminder of the short positions in different metals.
— Gold Ventures (@TheLastDegree) March 8, 2022
☠️Silver☠️ https://t.co/av9pvSBUnE pic.twitter.com/FJzAMxTOOZ
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