Weekly digest: inflation rising, Russia sanctions, gold gains


5 minutes read

Mar 3, 2022

gold price, silver price, platinum price, palladium price represented going up with a yellow chart and as chemical elements with each precious metals names as highlighted tiles.

03/03/22: Markets are on a wild rollercoaster ride, Eurozone inflation at a record high, Russia intensifies its invasion of Ukraine, gold proves itself as a safe haven. And more.

Investment news

📈 Gold price, silver price, and palladium price surge this week as markets weigh international sanctions against Russia, rising inflation, and supply fears (Kitco)

Investors are flocking to safe-haven assets, sending precious metals prices to new yearly highs. This surge in price comes after Russia’s invasion of Ukraine brought uncertainty on the markets and heavy economic sanctions on Russia from the international community.

Putin’s aggressive move on Ukraine comes in the midst of an already tense global economic situation with strained supply chains, rising inflation and energy prices, and a lasting COVID pandemic. Three factors fuelling the current rise in the price of gold.

oil prices up shown as oil barrels piled up with a red arrow going up in front

🛢Back to the 70’s. Oil has soared above $110 on Wednesday, its highest level since 2011, as European energy groups can’t help but turn away from Russian supply.

Sanctions on Russia for its invasion of Ukraine were carefully tailored to avoid directly hitting the country’s exports, but despite these efforts, signs are showing that the measures are nonetheless pushing banks and traders to move away from Russian crude.

“There’s no respite. This is a dramatic moment for the market and the world and supplies,” said John Kilduff, partner at Again Capital.

Russia is one of the world’s largest oil-producing nations and the world’s second-largest producer of natural gas.

🇪🇺 Euroflation. Eurozone inflation reached a new record high of 5.8% in February due to surging energy prices and supply chain disruptions. (Barron's)

This new rise follows January’s already high 5.1% and comes as oil and gas prices rocketed over fears about the impact on supplies from Russia's invasion of Ukraine.

The surge in inflation comes at a difficult time for European leaders as they warn their citizens of the "price to pay" from tough sanctions imposed on Russia, the EU's leading foreign gas supplier.

As you know, inflation is a big driver for the gold price, you can learn more about how inflation can affect gold here.

stock market volatility represented as a green arrow on a graph going up and down with a rollercoaster wagon going down it with two people inside who seem scared

🎢 Scary rollercoaster. Stock markets across the world continue their ups and down as they try to make sense of the intensifying conflict between Russia and Ukraine.

Stocks rose on Wednesday and didn’t show much movement on Thursday morning, reversing looses from Tuesday’s session.

“With the market down about 10%, roughly, in correction territory, and valuations having normalized, there is some support. But the situation remains very fluid, which means that back and forth is likely to continue,” said Angelo Kourkafas, an investment strategist at Edward Jones.

And Mark Haefele, chief investment officer at USB Global Wealth Management adds “Heightened volatility on the escalation of the conflict shows markets had not fully priced in the likelihood of deeper conflict”.

Federal reserve chair Jerome Powell talking at a public event

Fed Chair Powell still dead set on planned rate hikes but admits Ukraine impact on U.S. economy is ‘highly uncertain’ (CNBC)

Powell called the labor market “extremely tight” and said inflation has risen well above the Fed’s 2% target. With U.S. inflation currently at 7.5%, that’s quite the understatement.

Russia tries to keep investors in the country as international sanctions are rolled out and major companies are severing ties with the regime.

In order to stop a stampede of investors frightened by crippling Western sanctions over the invasion of Ukraine, Russia announced this Tuesday it was placing temporary restrictions on foreign investors seeking to exit Russian assets.

Russian assets went into freefall on Tuesday with London-listed ishares MSCI Russia ETF plunging 33% to hit a new record low. Russia's biggest lender, Sberbank collapsed 95% on the London market, loosing 99.9% of its value since the beginning of the year.


Veteran investor Mark Mobius explains why bitcoin is rallying amid Ukraine crisis and why gold is a place to be right now. (CNBC)

bitcoin symbols flying off an open wallet on a green background

Veteran investor Mark Mobius believes the recent rally in bitcoin can be attributed to Russians buying into the cryptocurrency.

Bitcoin prices surged 10% on Monday as sanctions were imposed on Russian institutions and banks as retaliation to Putin’s invasion of Ukraine.

Mobius also urged investors to diversify their portfolios and buy some gold as geopolitical tensions spill over into markets. Mobius famously says you should hold 10% of your portfolio in gold, to protect yourself from risks such as currency devaluation or geopolitical conflicts.

What else is happening

🌎 ”Half of humanity” is at risk. A major report from the UN’s Panel on Climate Change (IPCC) outlines the terrifying toll climate change will take on life on earth.

earth as an alarm clock ringin with fuming factory plant on top

“This report is a dire warning about the consequences of inaction,” says Hoesung Lee, chair of the Intergovernmental Panel on Climate Change (IPCC).

Written by leading climate experts from 67 countries, the report warns that half of the world’s population is ‘highly vulnerable’ to the impacts of climate change. If we don’t cut carbon emissions now, consequences such as flooding, crop failures, and water shortages will accelerate in the coming decades.

photo from the conflict in Ukraine with a pile of tires painted with the Ukrainian flag and Ukrainian monuments from Kyiv in the back

Ukraine war. In the first week of its invasion of Ukraine, Putin’s army intensifies urban bombing and sends a 60 km convoy of troops towards Ukraine.

As Vladimir Putin's forces escalate their attacks, focusing on the main cities in an attempt to break Ukrainian resistance, the Russian army has sent a 60 km-long column of troops towards Ukraine. Moscow claims to have taken control of Kherson in the south, the first large city to be seized.

In developing news, UN is calling for a ceasefire, and Moscow has announced it was ready for more talks with Kyiv.

👉 And while we’re on the subject, in last week’s SPOTLIGHT we explained how the Ukraine-Russia conflict could impact your savings.

an electric car being charged on a supercharger on a green background

⚡️ The Electric race. Ford will run its electric vehicle (EV) and internal-combustion engine (ICE) units as separate entities, as competition heats up. (Reuters)

The move is aimed at supercharging Ford’s EV business as it plays catch up with Tesla. Ford shares were up 4.7% on Wednesday as it announced a target of over 2 million EVs annually by 2026.

This aggressive bet on electric from Chief Executive Jim Farley has already helped Ford shares outperform those of rivals General Motors and Tesla in 2021.

And finally…

☄️ Rock space beats gold. A tiny fragment of a meteorite that fell in England has sold at auction for more than 120 times the value of its weight in gold. (BBC)

The 1.7g chunk of blackened rock reached the comfortable price of £9,256 ($12,600), largely beating its pre-market estimates.

The Winchcombe meteorite is regarded scientifically as the most important space rock ever to be recovered in the UK as it contains pristine chemistry from the formation of the Solar System.

See you next week!

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