Ukraine Bank Runs Could Soon Be Seen In EU And U.S.

Friday, February 28, 2014
By Paul Martin
28 February 2014

The plunge in the Ukrainian hryvnia this week and the risk of bank runs, not to mention the risk of contagion for European banks exposed to Ukraine should support gold. The Ukrainian currency has collapsed 22% versus gold this week – from 11,684 hryvnia per ounce on Monday to 14,235 hryvnia per ounce at 11:30 GMT today.

Rising geopolitical tensions between Russia and the West over developments in the Ukraine should also be supportive. This morning Ukraine has accused Russia of invading Ukraine and is considering a state of emergency after masked gunmen occupied two Crimean airports.

Other geopolitical flash points include Thailand, Venezuela and the Middle East which continue to quietly simmer in the background. Tail-risks have increased and could lead to a renewed safety bid for gold in the coming weeks.

The increasing scrutiny by regulators and the media on the manipulation of the gold price should also support gold. The FT’s story regarding manipulation and the likelihood of lawsuits against banks engaged in manipulation was withdrawn from the internet earlier in the week and overnight Bloomberg has again covered the possible manipulation of gold at the London A.M. fix. This story has been bubbling under the surface for years and may blow up in the coming weeks leading to higher gold prices.

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