Things are really coming to a head in the gold market, and we have a long, volatile weekend to get through before the main gold markets re-open. Here are some things to watch out for:
Rebels Disrupting Ukrainian Elections
As the pro-western government in Ukraine promised after president Viktor Yankunovych fled to Russia, presidential elections are taking place Sunday. However, rebels in eastern Ukraine have vowed to use bullets to stop the ballots, threatening to kill poll workers and attack voting places. Even Russian president Vladimir Putin, who has been widely accused of supporting the rebels with arms and advisors, has requested that they stand down and allow the elections to proceed, but the rebels have the bit in their teeth now, and are even demanding businesses in eastern Ukraine pay "taxes" to them.
Labor Negotiations in South Africa Platinum Mining Sector
The big three platinum mining companies have announced that court-ordered mediation with the AMCU mineworkers union will continue past the Friday deadline into the weekend. AMCU wants a 30% pay raise this year, with similar raises for the next three years. Mining companies claim that 40% of platinum operations in South Africa are already losing money, and such huge pay hikes are out of the question.
False reports that a settlement had been reached Friday afternoon sent platinum prices plunging $20 and ounce.
United Kingdom and EU Parliament Elections
Voters in the northern nations of the EU are tired of seeing their tax dollars go to bail out the Mediterranean countries, whom they see as refusing to change their overspending and corruption. Voters in the southern nations of the EU are tired of austerity measures that have sent unemployment skyrocketing past 20% in some instances, and seeing their savings wiped out and government services cut. A third, and not exclusive, section of the population believe that the EU has too much power over the economies of the member nations.
This is catching the EU government in a pincer between right and left "fringe" political parties, who are seeing much more support in this election that the last. If these parties gain enough seats in the European Union Parliament, they could derail current efforts to recover from the Great Recession.
The UK Independence Party in Britain is gaining a large measure of support in current elections, at the expense of the Conservatives. This situation is as if the Tea Party in the U.S. was a separate party from the Republicans. A main plank of the UKIP platform is disengagement from the EU.
Market Forces For Gold and Silver
Both gold and silver are wedging themselves into the tip of a pennant or triangle formation. Market indicators for gold are converging, with the 20-day moving average at $1,295.40, the 100-day moving average at $1,294,30, and the 200-day moving average at $1,300.70. This is an extremely tight spread. With gold and silver June options expiry on Tuesday, paper traders who haven't already closed their positions would really prefer gold stay in the current restricted range through Monday. The two main gold markets in the world (London Metals Exchange and the COMEX in New York) are closed Monday, which means that big moves in Asia on these very thin volumes Monday could have over-sized effects.
Have a happy and safe Memorial Day weekend, and don't forget to take some time and honor our fallen veterans from all our wars.