Further Sanctions Against Russia To Send Palladium Prices Surging [ETFS Physical Palladium Shares]

Recent miner strikes in South Africa have also disrupted supply for the big South African palladium producers, Amplats, Impala and Lonmin.

Investment demand for palladium has also been strong recently and as acted as a competing demand to industrial users.

EU Draws Up Further Sanctions Against Russia

Diplomatic fallout from the conflict in Ukraine continues to intensify. Amid claims and counter-claims by the Russian and Ukrainian sides concerning the fighting and incursions in Eastern Ukraine, the war of words has stepped up.

Russian President Vladimir Putin was quoted as saying last Friday that “I want to remind you that Russia is one of the most powerful nuclear nations. This is a reality, not just words.” While visiting EU leaders in Brussels at the weekend, Ukrainian President Petro Poroshenko said “we are very close to the point of no return, which is full scale war.”

As fighting continues, European Union leaders met in Brussels yesterday and recommend that the European Commission draw up further economic sanctions against Russia that would be imposed unless Russia demonstrates a de-escalation of its involvement in the conflict in Eastern Ukraine.

The recommended proposal includes “a provision on the basis of which every person and institution dealing with the separatist groups in the Donbass will be listed.”  Donbass is the region in eastern Ukraine that encompasses the Donetsk and Luhansk areas that are currently the scene of the heaviest fighting in the conflict.

Up until now, the EU’s sanctions against Russia have targeted specific individuals, and a number of companies in strategic industries such as the Russian financial sector and high tech oil sector equipment sector.

The next set of potential sanctions is believed to still focus on the energy and finance industries, but would extend to sectors such as Russia’s gas sector., and step up the financial sanctions.

In the financial area, there appear to be plans by the EU to continue to limit access for Russian companies to the western financial markets. Further financial sanctions have also been discussed such as attempting to limit Russian access the sovereign bond markets and access to syndicated lending deals but, for now, these broader financial sanctions appear to be in reserve.

Russia has already imposed a ban on EU food imports and the EU is still fearful of retaliatory economic sanctions from Russia, which could extend to the EU aerospace, shipbuilding and car manufacturing sectors.  This could ignite a harmful trade war which is why some EU member states are hesitant on sanctions at this time.

UK Moots Nuclear Financial Option Of Banning Russia From SWIFT

Last week, the UK was said to be proposing that Russia be blocked from the international SWIFT bank transfer network. If this occurred it would essentially shut Russian banks and other companies out of the international banking network. SWIFT is a Brussels based organisation and so it is obliged to follow any sanctions that are imposed by the European Commission.

However, the very fact that a proposal even exists to shut out Russia from the SWIFT network shows that the Ukrainian crisis is now taking on a more ominous tone, and that geopolitical risk is set to rise from here unless diplomatic intervention can somehow retrieve the situation.

With a heightened terror threat level being imposed in the UK, a potential ratcheting up of sanctions on Russia, and the threat of a larger trade and currency war on the horizon, September should be an interesting month for the precious metals markets.

The UK has raised the country’s terror threat level from substantial to severe, its second highest level. MI5 and MI6 said there was no information to suggest an attack was imminent.

The 13 year anniversary of September 11 looms next week and given developments in recent days and weeks, one must be wary of new attacks in the UK , U.S. and other western nations.

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