Looking at the price change (or lack of price change) in the SPDR Gold ETF (GLD – 125.06) one would never think that there is a potential major conflict flaring up in Ukraine. It used to be when a serious conflict in the world is flaring up, not something between some housewives with a reality show, but a real fight like Ukraine and Russia that the price of gold would move higher as it is considered a safe haven or flight to quality. Either being able to gain exposure to volatility through VIX related ETPs, options, or futures has displaced gold as a place to get protection from potential financial market reactions to a geopolitical event or the market is yawning at the activity in Ukraine. I personally think it is probably a big yawn (so far). Last week the price of gold was slightly lower and GVZ moved down slowly as the week progressed.
Despite Russia being a major energy exporter and potentially retaliating with moves that would increase energy prices the price of oil as measured by the United States Oil Fund ETF (USO – 36.29) drifted lower. The reaction from OVX was similar to the price action of GVZ early in the week, but on Thursday and Friday OVX come under pressure and finish the week at 17.80, near the low of the week.
The only bright spot if you are a trader hoping for some signs of higher volatility shows up in the OVX curve where the August contract was up 0.10. Of all the futures contracts that trade at the CFE the August OVX future was the only one to have a week over week gain. The OVX curve actually steepened some and the GVZ curve shifted in more of a parallel fashion, but both seem to continue to behave as if the underlying markets are not expected to put up any big moves in the next few weeks or even months.