Peanut butter and jelly, fish and chips, global economic meetings and anarchists' demonstrations. Speaking of things that we are now used to going together, hasn't the combination of G20 meetings and anarchists become a little cliché? Are they really demonstrating against the ills of unbridled capitalism or has this turned into something else? Images from Hamburg of burning cars, looted stores, and millions of euros of destruction are not the well thought out commentary necessary for protests such as these. "The income gap is growing," or "increased inequality due to legislation paid for by lobbyists," or a number of other slogans would have done nicely. Obviously there needs to be something to get the attention of those watching the protests, I get that, but destruction of property and looting may have the opposite effect and muddy the waters so much so that the original message is forgotten. Is it possible that those that want to counter these arguments hire instigators to do exactly this? Muddy the waters? I can't think of any other reason why demonstrators would want to undermine themselves other than sheer stupidity.

Fed Chair Janet Yellen gives testimony to Congress starting tomorrow and no surprises are expected. Should inflation continue to slow, the Fed will be forced to suspend any additional interest rate hikes and Yellen will testify as much to Congress. The only potential sticking point in her testimony will be whether the Republican chair of the committee and his fellow Republicans push Yellen on speeding up offloading U.S. Treasuries that the Fed carries on its balance sheet, over $4 trillion. While technically a Republican Congress should be very worried about such a massive amount of what is essentially U.S. government debt to the Fed, the current state of affairs will allow them to ignore this debt. While the Fed's prescribed method of offloading the debt is great on paper, no start date has been given. This means clearing the balance sheet, not rolling over U.S. government debt, has been delayed indefinitely. As long as Yellen doesn't give a firm date or explicitly mention any further tightening measures, U.S. financial markets will be spared a massive sell-off. Any mention of such actions, would ruin the summer of investors to be sure.

Weary of Fed actions, many had turned to gold as the safest of harbors, yet it appears it may no longer be that. The precious metal has behaved very erratically in recent weeks falling to lows of the year. Gold has been trading in a $1,200-$1,400 per ounce pattern for much of the last 50 months. It had hit highs of near $1,900 in 2011 but has fallen back to nearly half of its value. One of the major issues I believe is that there is too much "paper gold" being traded, meaning the vast majority of contracts are never delivered upon and traders of gold never expect to actually buy the metal. This means that the amount of actual gold that exists is dwarfed by its derivatives and equivalent on paper. This ratio is over one thousand to one. Meaning only one of 1,000 gold contracts could actually be delivered upon. The use of margin in trading gold has only exacerbated this problem. While gold is up nearly $1,000 since the turn of the century, its ability since then to hold on to any meaningful price handle may be a sign of trouble to come.

As the global economy grows, commodities should continue to appreciate however we're seeing quite the opposite effect as many commodities are being replaced by cheaper alternatives. In the case of crude oil, for example, "shale oil" has made a major dent in crude oil prices and has placed an artificial shale put of $50 a barrel for West Texas Intermediate contracts. Last week, U.S. production of shale oil hit a 2.5 year high of nearly 6,000 barrels per day. This is very bad news for OPEC and oil exporters in general. Governments that had predicted $100+ oil for years to come and had budgeted accordingly are now very much in trouble. How can they make up for these budget shortfalls? By either cutting spending or increasing revenue, the latter of which means dropping oil prices down even further.

The cash squeeze that these exporters of oil find themselves in will force them to act out or collapse altogether and the global economy is at risk as these tensions settle. Investors should be aware of these types of major iceberg risks that exist, whether they be in gold, oil, or unexpected Fed actions.