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Russia Threatens To Shut Off Gas To Ukraine
Posted May 13th, 2014
Los Angeles CA, May 13 (Tangible Investments) - by James O’Dell - Gold and silver prices turned sharply higher on Monday, with gold breaking above $1,300 an ounce for a brief period before the pressure of selling from speculators took over and the yellow metal finished the day gaining $6.44 or 0.50 percent to close at $1,295.19 an ounce, as the dollar strengthened against the euro and the yen. Silver, however, added $0.38 or 1.99 percent to close at $19.52 an ounce, while the gold/silver ratio fell to 66.37.
Gold is still one of the better performing assets of 2014, having gained 7.5 percent so far this year, due to a strong first quarter and an increase in safe haven demand as tensions continue to escalate between Russia and the West. Gold has been trading in a tight range between $1,285 and $1,315 an ounce since mid-April, and "(A break out of that range) would only be caused by an escalation between the West and Russia that would send stock markets down and investors out of risky assets and into safe havens, (such as) government bonds and gold," says Peter Fertig, of Quantitative Commodity Research.
Meanwhile, the West was reminded on Monday that Russia still holds a very powerful position in the region, when Gazprom, Russia’s gas exporting monopoly, threatened to cut off energy supplies to Ukraine. Gazprom's chief Alexei Miller ordered Ukraine to pay for its June deliveries in advance due to mounting debts that now total $3.51 billion (2.55 billion euros). Such a move would not only wipe out half of Ukraine’s supply it could even disrupt supplies to the entire European Union (EU).
This crisis points to just how important Ukraine is to Russia logistically, nearly 15 percent of all the gas consumed in Europe passes through Ukraine from Russia. According to the U.S. Energy Department, 30 percent of the natural gas consumed by the Balkans, the EU, Turkey, Norway, and Switzerland last year, came from Russia.
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