Sive Morten
Special Consultant to the FPA
- Messages
- 18,655
Fundamentals
Yesterday we've talked about US domestic affairs, and particularly the Fed strategy, how it could get investors totally showed by keeping rate at high level and providing liquidity at once in a way of QE that will be not officially announced. Very handy plan and we think that the Fed will follow it. Unavoidably this will increase inflationary pressure later in the year. So, this is the first reason of potential gold appreciation. Second is, we have few political and economical issues that definitely will become supportive for the gold market as well. You will not hear these political news in large media streams, but comments from big politicians indirectly hints on these events.
Market overview
Gold prices fell over 1% on Tuesday, pressured by a firmer dollar and higher U.S. Treasury yields after Federal Reserve Governor Christopher Waller's hawkish remarks on interest rate cuts this year, but safe-haven buying limited bullion's downside. The dollar index rose nearly 1% to a more than one-month high, making bullion less attractive for other currency holders, while yields on the benchmark U.S. 10-year Treasury notes also gained.
Waller said the United States was "within striking distance" of the Fed's 2% inflation goal, but the central bank should not rush towards cuts in its benchmark interest rate until it is clear lower inflation will be sustained. The Fed bank is widely expected to hold its policy rate steady at the end of its Jan. 30-31 meeting. Traders see a ~47% probability of an interest rate cut in March, according to the CME Fedwatch tool. Elsewhere, European Central Bank officials also pushed back against market expectations for rapid rate cuts this year.
UBS finds 'unprecedented' physical demand for gold. ️Physical demand is primarily observed from China. And it hasn't weakened yet. ️Note that physical demand usually has little effect on price dynamics, rather providing a “base,” but CTA funds and hedge funds have been sharply selling gold lately. As of January 17, the UBS FX Flow Monitor, which uses UBS's proprietary flow data, shows that hedge funds have seen the largest flow of gold sales since February 2023.
According to UBS, these extended sales flows have caused gold prices to fall 2.8% since the start of the year, “but history suggests prices are likely to recover subsequently.” Since 2020, the gold price has averaged 1.8% higher over the next 10 days after hedge fund selling flows reached 3 standard deviations.
We respect UBS research, the quality of its analysts, that they provide us with this information, but now you do not need to have MBA degree to see factors, suggesting gold appreciation in nearest months.
Macroeconomic factors
In general we rare consider results of Davos forums and this is fair, because in recent few years, although it is called as "economy forum", nobody talks about economy - green energy, diseases, global elites initiatives etc. That's what all these story about. This time again, nothing explicitly was said economics, but discussion has relation to Bretton Woods system, or better to say - its future. By opinion of M. Khazin research center (M. Khazin is economy expert, often is invited as a consultant fo UN Security Council) "no one is seriously considering the option of preserving the Bretton Woods model, with all its institutions, the IMF, the World Bank and the WTO."
He makes this conclusion due to the three major topics of recent weeks - attempt to confiscate the seized assets of Russia. The second is the refusal of France (Airbus) from a large contract for the supply of aircraft to Iran. The third is the Economic forum in Davos. Even within the framework of theoretical models, no one suggests or discusses measures to restore the global dollar system and unified global institutions.
A few weeks ago, the situation was different. Yes, everyone has already recognized serious problems, but the question was how to overcome these problems somehow. Today, apparently, everyone has already understood that this is basically impossible and the question has arisen otherwise: how the ruling elites will be able to maintain their status. Since those who lose it will surely lose all their accumulated wealth.
In addition, the question is what the new regional elites will look like. It is clear that the concept of currency zones can no longer be abandoned, but it is also impossible to recognize them publicly until the new elites of the new currency zones recognize the assets of the old financial elites. This is due to the fact that the assets of the old elites are mainly of a financial nature and are closely linked to various accumulated debts. And if dollar assets are devalued, then it will be much more difficult to write off debts. And, most importantly, those who massively declare defaults will not be able to claim high positions in the world.
And if we also take into account that financiers do not have direct control of army, defence and law enforcement agencies, the situation becomes even more difficult for them. We have written a lot about the fact that the transition through the crisis will be a very difficult task for any more or less large company. But the events of the last week suggest that even the elites of the global dollar system have indirectly recognized this. This means that there is very little time left before the start of serious events.
The US inflation data for December 2023 (that has increased again, and we have discussed earlier) seems to have finally convinced the US monetary authorities and the main managers of the Bretton Woods system that there will be no return to the old principles (see the first section of this Review). This means that the largest institutions of the system, as financial as managing (IMF, World Bank, WTO, Fed) already have started working to protect the interests of their beneficiaries.
Of course, as usual at the cost of all other participants in the economic process, both entrepreneurs, countries, and other institutions. The problem here is that all these institutions and their managers are trained to work within the framework of the B-W system and therefore are not protected from its systemic abuse. Not to mention the fact that their activities are absolutely transparent, both through the system of dollar settlements, and through the system of global ratings and consulting.
Therefore, the salvation of all other companies and institutions that do not belong to the elite of the B.-W. system is possible only through a change in the system strategy. Such a new strategy can also be implemented, to a large extent, by existing management. But this is the question already to the quality of economists who is able to develop such a strategy...
Next bulk of events is mostly political, but it is appearing because of changing of macroeconomic background, mentioned here. You can't find this information freely in the net, because it represents undercover negotiations and attitude between big political figures. But you could assure with its truth by statements that are done by politicians.
Political factors
We're not occasionally placed in Telegram today recent J. Borrell statement, concerning Israel. Here is also a printed link. As you understand, so high political figures as J. Borrell never talks by some gut feeling. He just translates the information of elite groups which he is represented. The compromising information against Israel leader was existed for a long time already, why it turns public only now? What the reason for that? Partially, you could find the answer in this article. But this was a week ago. Now situation is turning to hot confrontation.
Biden called Israeli Prime Minister Netanyahu after declaring a red alert for all American bases in the Middle East. The risk of the US bases being hit and blockaded is greater than ever. Over the past 15 days, indiscriminate IDF (Israel Defense Forces) strikes have killed more than 800 women and children in the Gaza Strip and Palestine. The losses of the IDF itself exceeded 6 thousand wounded and killed. Sanitary losses exceed 7,500. The number of amputees in Israel is growing every day and has already exceeded 1,200 people.
Protests in Israel itself against Netanyahu and his cabinet have grown significantly. According to independent polls, the level of support for the Israeli Prime Minister fell to 17%, support for his cabinet fell to 23%. Rallies and protests against the Netanyahu clan and for the immediate release of Hamas hostages are increasing every day. Josep Borrell has already contacted the Israeli Foreign Minister three times and urgently demanded an end to the indiscriminate aggression.
After ignoring these requests (!!!), the European Commission stopped transferring 155 mm shells, components for UAVs, intelligence and weapons to Israel. The Pentagon will also significantly reduce supplies starting today.
Now Brussels intends to accumulate and supply 1,000,000 shells to Ukraine, completely stopping supplies to the IDF. The White House plans to do the same. The Biden administration does not intend to further set fire to the Middle East. The US Department of Justice is preparing to transfer to the Israeli Ministry of Justice and the Supreme Court of Israel materials on Netanyahu’s corruption crimes, which he had previously blocked (!!!). The Tel Aviv prosecutor's office has again opened cases of embezzlement from the national budget by Netanyahu's wife. All signals have been sent to Benjamin. The big question now is whether they will stop him and those behind him on Wall Street and in Washington.
But we see only Borel speech, which still reflects and discover mentioned above political processes. Second is - redirection of ammunition flows to Ukraine. As you know the largest NATO defence training manoeuvres are ready to start. This is not just a training manoeuvres, this is new spiral of escalation in Russia-NATO war. The bets are getting higher in this confrontation with direct involving of NATO forces as Ukraine is no longer could do this.
NATO begins exercises on Monday that will last until May (!!!). The code name of the exercise is Steadfast Defender 2024. The main goal is to prepare to repel an attack by a conditional eastern enemy, taking into account all the mistakes and developments in the Ukrainian theater of operations. During the entire 5 months of the exercise, NATO officers will circulate at the Ukrainian LСС (The line of combat contact) and conduct live firing and tactical maneuvers as part of the Ukrainian Armed Forces Special Forces, the Armed Forces Air Force and airmobile brigades.
The main emphasis is on the confrontation with Russia in the border areas of Finland, Sweden, Latvia and Poland. In addition, a scenario for quickly capturing and holding the Baltic-Black Sea sanitary cordon from Vilnius to Odessa will be worked out. In a simulation model using stimulators, including AI, tactical nuclear weapons personnel will be trained in the Leningrad, Arkhangelsk, Murmansk, Smolensk and Pskov regions. For the first time, submarines and anti-submarine boats and corvettes with radar will take part in the exercises, which, as planned, will practice searching for and destroying Russian submarines in the Barents and Baltic seas.
Individual tasks are set for the American continent during the exercises. Its goal is to carry out preventive strikes on permanent silo-based sites of Russian strategic nuclear forces, as well as to carry out preventive and retaliatory strikes on critical infrastructure facilities of the Russian Federation and the Republic of Belarus.
Reinforced NATO special forces units will practice seizing the Kaliningrad region and blocking shipping in the Baltic. Officially, 93,000 military personnel will take part in the exercises, unofficially over 340,000, including headquarters centers, control centers, aircraft carrier groups and fleets, space forces and special forces groups.
This is the first exercise of this size and type since the end of the Cold War.
So, in reality this will not be the exercise, or better to say - not only exercise. The exercise with elements of real war at the line of combat contact. Signing of agreement with UK on defence guarantees shifts conflict on another stage. Now it becomes de-facto direct Russia-NATO confrontation with all forgoing consequences. But this is not all yet.
The attack on the oil base in Bryansk is an illustration of a new format of actions by Ukraine’s allies, who are confident that their actions will remain unanswered.
The Russian Armed Forces, as in Odessa, as in Kharkov, as in other settlements of Ukraine, struck foreign (French) combatants only in response to their direct actions as part of the Armed Forces of Ukraine.
The escalation in the Ukrainian battle theater is only intensifying. Macron is going to sign an agreement similar to the British one on security guarantees for Ukraine, which also provides for the direct participation of seconded officers in helping the Armed Forces of Ukraine. At its core, this is a direct act of aggression by France against Russian soldiers and sovereign Russian territory. What to expect next from this confrontation is a rhetoric question, but hardly it will calm down situation...
Conclusion:
So, as macroeconomic as geopolitical factors point on new escalation spiral and higher degree of confrontation as in Middle East as in Ukraine. With this new reality we can't suggest gold weakness even by using of common sense. If it is more or less clear about Ukraine, as conflict goes there for two years already, not everybody recognizes the scale of Middle East problems:
The trap has been sprung: Iran is dragging the United States into more and more conflicts in the Middle East, skillfully creating a huge number of tension points on the map. The United States no longer remembers where it all began (the conflict in Gaza), chasing after the Houthis in Yemen, then the resistance forces in Iraq and Syria, and now the IRGC.
The important thing is that Iran, fighting with the entire developed world, is putting pressure on the weakest point - the national debt of the G7 countries and the ability to service it. The closure of the Red Sea puts an end to plans for a quick reduction in inflation and the inclusion of the printing press . Without it, increasing debt is very expensive and uncomfortable. And without new loans, the huge costs of the war in the desert (+Israel and Ukraine) cannot be covered.
In the Middle East - with the trigger in Gaza - more and more countries are being drawn into the vortex of direct military escalation. To varying degrees, Israel, Lebanon, Yemen, Iraq and Iran are already participating in the growing conflict. From countries outside the region, the USA, Great Britain and France are participating. Countries that are unable to stand aside but limit themselves to humanitarian and diplomatic participation are also being drawn into the funnel: Egypt, Turkey, Bahrain, Saudi Arabia, Jordan.
The problem is not even that, according to the law of escalation, these countries are being drawn further into the game in the military aspect. The problem is that the conflict does not spread according to the law of geographical expansion of the conflict. The conflict is expanding along the lines of tension between the traditional and conservative (for now Islamic) third world and modern Western civilization, the Middle Eastern vanguard of which, represented by Israel, is waging war on essentially the entire Muslim world.
These lines of tension have no boundaries, since Europe is sufficiently Islamized that, after crossing the next line in the conflict, it will flare up and not fade away. Stubbornness, tendentiousness and civilizational frenzy in upholding principles carried out by Israel are putting the world on the brink of a complete reformatting, the outcome of which no one knows.
This situation has two options - either a big war or a big revolution. The lines of conflict have already gone beyond the Islamic world, reaching Western Sahara, where Hezbollah began to form anti-British groups to gain control of the Strait of Gibraltar. And there is not a Muslim core, but Marxist groups of the unrecognized Sahrawi Republic. Everything is just beginning and it is unclear where it will lead.
We do not want to dig political and war topics things too deep, because this is not the object of our interest. The one thing is clear - gold should keep raising, as due to pure economy factors that we've discussed yesterday in our FX research as due macroeconomic and geopolitics. Thus, we do not see any reasons to change our long-term strategy by far that we've started almost two years ago - we suggest keeping of physical gold accumulation and long positions without (or with very low 1:2) leverage in long term perspective.
Yesterday we've talked about US domestic affairs, and particularly the Fed strategy, how it could get investors totally showed by keeping rate at high level and providing liquidity at once in a way of QE that will be not officially announced. Very handy plan and we think that the Fed will follow it. Unavoidably this will increase inflationary pressure later in the year. So, this is the first reason of potential gold appreciation. Second is, we have few political and economical issues that definitely will become supportive for the gold market as well. You will not hear these political news in large media streams, but comments from big politicians indirectly hints on these events.
Market overview
Gold prices fell over 1% on Tuesday, pressured by a firmer dollar and higher U.S. Treasury yields after Federal Reserve Governor Christopher Waller's hawkish remarks on interest rate cuts this year, but safe-haven buying limited bullion's downside. The dollar index rose nearly 1% to a more than one-month high, making bullion less attractive for other currency holders, while yields on the benchmark U.S. 10-year Treasury notes also gained.
Waller said the United States was "within striking distance" of the Fed's 2% inflation goal, but the central bank should not rush towards cuts in its benchmark interest rate until it is clear lower inflation will be sustained. The Fed bank is widely expected to hold its policy rate steady at the end of its Jan. 30-31 meeting. Traders see a ~47% probability of an interest rate cut in March, according to the CME Fedwatch tool. Elsewhere, European Central Bank officials also pushed back against market expectations for rapid rate cuts this year.
UBS finds 'unprecedented' physical demand for gold. ️Physical demand is primarily observed from China. And it hasn't weakened yet. ️Note that physical demand usually has little effect on price dynamics, rather providing a “base,” but CTA funds and hedge funds have been sharply selling gold lately. As of January 17, the UBS FX Flow Monitor, which uses UBS's proprietary flow data, shows that hedge funds have seen the largest flow of gold sales since February 2023.
According to UBS, these extended sales flows have caused gold prices to fall 2.8% since the start of the year, “but history suggests prices are likely to recover subsequently.” Since 2020, the gold price has averaged 1.8% higher over the next 10 days after hedge fund selling flows reached 3 standard deviations.
We respect UBS research, the quality of its analysts, that they provide us with this information, but now you do not need to have MBA degree to see factors, suggesting gold appreciation in nearest months.
Macroeconomic factors
In general we rare consider results of Davos forums and this is fair, because in recent few years, although it is called as "economy forum", nobody talks about economy - green energy, diseases, global elites initiatives etc. That's what all these story about. This time again, nothing explicitly was said economics, but discussion has relation to Bretton Woods system, or better to say - its future. By opinion of M. Khazin research center (M. Khazin is economy expert, often is invited as a consultant fo UN Security Council) "no one is seriously considering the option of preserving the Bretton Woods model, with all its institutions, the IMF, the World Bank and the WTO."
He makes this conclusion due to the three major topics of recent weeks - attempt to confiscate the seized assets of Russia. The second is the refusal of France (Airbus) from a large contract for the supply of aircraft to Iran. The third is the Economic forum in Davos. Even within the framework of theoretical models, no one suggests or discusses measures to restore the global dollar system and unified global institutions.
A few weeks ago, the situation was different. Yes, everyone has already recognized serious problems, but the question was how to overcome these problems somehow. Today, apparently, everyone has already understood that this is basically impossible and the question has arisen otherwise: how the ruling elites will be able to maintain their status. Since those who lose it will surely lose all their accumulated wealth.
In addition, the question is what the new regional elites will look like. It is clear that the concept of currency zones can no longer be abandoned, but it is also impossible to recognize them publicly until the new elites of the new currency zones recognize the assets of the old financial elites. This is due to the fact that the assets of the old elites are mainly of a financial nature and are closely linked to various accumulated debts. And if dollar assets are devalued, then it will be much more difficult to write off debts. And, most importantly, those who massively declare defaults will not be able to claim high positions in the world.
And if we also take into account that financiers do not have direct control of army, defence and law enforcement agencies, the situation becomes even more difficult for them. We have written a lot about the fact that the transition through the crisis will be a very difficult task for any more or less large company. But the events of the last week suggest that even the elites of the global dollar system have indirectly recognized this. This means that there is very little time left before the start of serious events.
The US inflation data for December 2023 (that has increased again, and we have discussed earlier) seems to have finally convinced the US monetary authorities and the main managers of the Bretton Woods system that there will be no return to the old principles (see the first section of this Review). This means that the largest institutions of the system, as financial as managing (IMF, World Bank, WTO, Fed) already have started working to protect the interests of their beneficiaries.
Of course, as usual at the cost of all other participants in the economic process, both entrepreneurs, countries, and other institutions. The problem here is that all these institutions and their managers are trained to work within the framework of the B-W system and therefore are not protected from its systemic abuse. Not to mention the fact that their activities are absolutely transparent, both through the system of dollar settlements, and through the system of global ratings and consulting.
Therefore, the salvation of all other companies and institutions that do not belong to the elite of the B.-W. system is possible only through a change in the system strategy. Such a new strategy can also be implemented, to a large extent, by existing management. But this is the question already to the quality of economists who is able to develop such a strategy...
Next bulk of events is mostly political, but it is appearing because of changing of macroeconomic background, mentioned here. You can't find this information freely in the net, because it represents undercover negotiations and attitude between big political figures. But you could assure with its truth by statements that are done by politicians.
Political factors
We're not occasionally placed in Telegram today recent J. Borrell statement, concerning Israel. Here is also a printed link. As you understand, so high political figures as J. Borrell never talks by some gut feeling. He just translates the information of elite groups which he is represented. The compromising information against Israel leader was existed for a long time already, why it turns public only now? What the reason for that? Partially, you could find the answer in this article. But this was a week ago. Now situation is turning to hot confrontation.
Biden called Israeli Prime Minister Netanyahu after declaring a red alert for all American bases in the Middle East. The risk of the US bases being hit and blockaded is greater than ever. Over the past 15 days, indiscriminate IDF (Israel Defense Forces) strikes have killed more than 800 women and children in the Gaza Strip and Palestine. The losses of the IDF itself exceeded 6 thousand wounded and killed. Sanitary losses exceed 7,500. The number of amputees in Israel is growing every day and has already exceeded 1,200 people.
Protests in Israel itself against Netanyahu and his cabinet have grown significantly. According to independent polls, the level of support for the Israeli Prime Minister fell to 17%, support for his cabinet fell to 23%. Rallies and protests against the Netanyahu clan and for the immediate release of Hamas hostages are increasing every day. Josep Borrell has already contacted the Israeli Foreign Minister three times and urgently demanded an end to the indiscriminate aggression.
After ignoring these requests (!!!), the European Commission stopped transferring 155 mm shells, components for UAVs, intelligence and weapons to Israel. The Pentagon will also significantly reduce supplies starting today.
Now Brussels intends to accumulate and supply 1,000,000 shells to Ukraine, completely stopping supplies to the IDF. The White House plans to do the same. The Biden administration does not intend to further set fire to the Middle East. The US Department of Justice is preparing to transfer to the Israeli Ministry of Justice and the Supreme Court of Israel materials on Netanyahu’s corruption crimes, which he had previously blocked (!!!). The Tel Aviv prosecutor's office has again opened cases of embezzlement from the national budget by Netanyahu's wife. All signals have been sent to Benjamin. The big question now is whether they will stop him and those behind him on Wall Street and in Washington.
But we see only Borel speech, which still reflects and discover mentioned above political processes. Second is - redirection of ammunition flows to Ukraine. As you know the largest NATO defence training manoeuvres are ready to start. This is not just a training manoeuvres, this is new spiral of escalation in Russia-NATO war. The bets are getting higher in this confrontation with direct involving of NATO forces as Ukraine is no longer could do this.
NATO begins exercises on Monday that will last until May (!!!). The code name of the exercise is Steadfast Defender 2024. The main goal is to prepare to repel an attack by a conditional eastern enemy, taking into account all the mistakes and developments in the Ukrainian theater of operations. During the entire 5 months of the exercise, NATO officers will circulate at the Ukrainian LСС (The line of combat contact) and conduct live firing and tactical maneuvers as part of the Ukrainian Armed Forces Special Forces, the Armed Forces Air Force and airmobile brigades.
The main emphasis is on the confrontation with Russia in the border areas of Finland, Sweden, Latvia and Poland. In addition, a scenario for quickly capturing and holding the Baltic-Black Sea sanitary cordon from Vilnius to Odessa will be worked out. In a simulation model using stimulators, including AI, tactical nuclear weapons personnel will be trained in the Leningrad, Arkhangelsk, Murmansk, Smolensk and Pskov regions. For the first time, submarines and anti-submarine boats and corvettes with radar will take part in the exercises, which, as planned, will practice searching for and destroying Russian submarines in the Barents and Baltic seas.
Individual tasks are set for the American continent during the exercises. Its goal is to carry out preventive strikes on permanent silo-based sites of Russian strategic nuclear forces, as well as to carry out preventive and retaliatory strikes on critical infrastructure facilities of the Russian Federation and the Republic of Belarus.
Reinforced NATO special forces units will practice seizing the Kaliningrad region and blocking shipping in the Baltic. Officially, 93,000 military personnel will take part in the exercises, unofficially over 340,000, including headquarters centers, control centers, aircraft carrier groups and fleets, space forces and special forces groups.
This is the first exercise of this size and type since the end of the Cold War.
So, in reality this will not be the exercise, or better to say - not only exercise. The exercise with elements of real war at the line of combat contact. Signing of agreement with UK on defence guarantees shifts conflict on another stage. Now it becomes de-facto direct Russia-NATO confrontation with all forgoing consequences. But this is not all yet.
The attack on the oil base in Bryansk is an illustration of a new format of actions by Ukraine’s allies, who are confident that their actions will remain unanswered.
The Russian Armed Forces, as in Odessa, as in Kharkov, as in other settlements of Ukraine, struck foreign (French) combatants only in response to their direct actions as part of the Armed Forces of Ukraine.
The escalation in the Ukrainian battle theater is only intensifying. Macron is going to sign an agreement similar to the British one on security guarantees for Ukraine, which also provides for the direct participation of seconded officers in helping the Armed Forces of Ukraine. At its core, this is a direct act of aggression by France against Russian soldiers and sovereign Russian territory. What to expect next from this confrontation is a rhetoric question, but hardly it will calm down situation...
Conclusion:
So, as macroeconomic as geopolitical factors point on new escalation spiral and higher degree of confrontation as in Middle East as in Ukraine. With this new reality we can't suggest gold weakness even by using of common sense. If it is more or less clear about Ukraine, as conflict goes there for two years already, not everybody recognizes the scale of Middle East problems:
The trap has been sprung: Iran is dragging the United States into more and more conflicts in the Middle East, skillfully creating a huge number of tension points on the map. The United States no longer remembers where it all began (the conflict in Gaza), chasing after the Houthis in Yemen, then the resistance forces in Iraq and Syria, and now the IRGC.
The important thing is that Iran, fighting with the entire developed world, is putting pressure on the weakest point - the national debt of the G7 countries and the ability to service it. The closure of the Red Sea puts an end to plans for a quick reduction in inflation and the inclusion of the printing press . Without it, increasing debt is very expensive and uncomfortable. And without new loans, the huge costs of the war in the desert (+Israel and Ukraine) cannot be covered.
In the Middle East - with the trigger in Gaza - more and more countries are being drawn into the vortex of direct military escalation. To varying degrees, Israel, Lebanon, Yemen, Iraq and Iran are already participating in the growing conflict. From countries outside the region, the USA, Great Britain and France are participating. Countries that are unable to stand aside but limit themselves to humanitarian and diplomatic participation are also being drawn into the funnel: Egypt, Turkey, Bahrain, Saudi Arabia, Jordan.
The problem is not even that, according to the law of escalation, these countries are being drawn further into the game in the military aspect. The problem is that the conflict does not spread according to the law of geographical expansion of the conflict. The conflict is expanding along the lines of tension between the traditional and conservative (for now Islamic) third world and modern Western civilization, the Middle Eastern vanguard of which, represented by Israel, is waging war on essentially the entire Muslim world.
These lines of tension have no boundaries, since Europe is sufficiently Islamized that, after crossing the next line in the conflict, it will flare up and not fade away. Stubbornness, tendentiousness and civilizational frenzy in upholding principles carried out by Israel are putting the world on the brink of a complete reformatting, the outcome of which no one knows.
This situation has two options - either a big war or a big revolution. The lines of conflict have already gone beyond the Islamic world, reaching Western Sahara, where Hezbollah began to form anti-British groups to gain control of the Strait of Gibraltar. And there is not a Muslim core, but Marxist groups of the unrecognized Sahrawi Republic. Everything is just beginning and it is unclear where it will lead.
We do not want to dig political and war topics things too deep, because this is not the object of our interest. The one thing is clear - gold should keep raising, as due to pure economy factors that we've discussed yesterday in our FX research as due macroeconomic and geopolitics. Thus, we do not see any reasons to change our long-term strategy by far that we've started almost two years ago - we suggest keeping of physical gold accumulation and long positions without (or with very low 1:2) leverage in long term perspective.
