Morning all,

Rough night on Friday for commodities with Gold well and truly deserted. Big opening falls in the US as speculation that Cyprus would have to sell its gold only compounded the bearishness. Sub $1500 not a good look. I think it is fair to say that we are going to see some blood in the streets today in commodity stocks. It was not only Gold that took a whack but Oil, Copper etc. with the exception of Iron Ore. If Gold continues its slide there will be some panic out there from high cost producers trying desperately to put on some hedges ,probably too late so expect to see production cuts. Of course if you are a NCM shareholder you will be used to that..actually if you are a shareholder in any gold company you are probably used to that…in the old days when yield was not king we would see the Aussie Dollar fall as commodities fell..not anymore..well, not yet anyway..money appears to be still flowing our way and chasing high yield investments coupled with a  AAA rating..

The huge growth of Exchange Traded Funds(ETFs) which replicate the Gold price has led to a vast increase in speculators and a bubble in some things..looks like the five year bull market in Gold has been fuelled and stoked by the ETFs and the sound of fast money leaving these instruments is really accelerating the price falls in Gold and other commodities!

Maybe our only chance of salvation today in commodity stocks is Chinese economic numbers due out around 12..GDP expected to be around 8% up from 7.9%..

Oil at a 9 month low ..strong dollar equals cheaper petrol ,equals more money in people’s pockets equals a mild stimulus to the economy..

The SPI was down 19 but suspect we may see some more damage than that given our commodity stocks. May be headed back down to 4950 again..remember the range is 4850 to 5150…trade the risk curve accordingly!

Idea of the Day

Adam Scott Golf shirts will be popular today!!!!Well done..nerves of steel…..

In stocks I remain convinced that the downside in BHP is limited and that investors for the medium term should be looking at this one..today will be another opportunity to pick some up with falls of Around 2% for BHP and RIO overseas…in the Gold space my preferred stocks are SLR and BDR…but no point in being a hero ..Gold may have further to fall…and even the pretty girls get killed in a bus crash!!!

Things that make me go all Augusta

1.Great performance by Adam Scott at the Masters.!

2. Goldman cut its three-month Gold price target to $1,530 an ounce from $1,615 and lowered the 12-month forecast to $1,390 from $1,550.

3. Billionaire John Paulson lost more than $US300 million ($285 million) of his personal wealth on his gold bet, as the precious metal fell to its lowest price in almost two years.Paulson has roughly $US9.5 billion invested across his hedge funds, of which about 85 per cent is invested in gold share classes. Gold dropped 4.1 per cent on Friday, shaving about $US328 million from his net worth on this bet alone.

4.Black Caviar!!

5.If you got money confiscated by the Cypriot Government (alias Germany) then they are now giving you a Euro Passport!!Good trade..NOT!

6.The US Postal system is one of the Icons of the US …right? well… In the past six years, the Post Office has lost $41 BILLION and they have a cumulative deficit of $36 billion. The Post Office will lose another $10 to $15 billion this fiscal year. They have $15 billion of debt on their balance sheet, with $9.5 billion payable in the next 9 months. $33.9 Billion of payments for pension and health benefits for retirees, all due within the next 5 years. $25 billion for workers compensation and sick leave payments.

7. Iron Ore Miners: are poised to report weaker iron ore and coal shipments in the March quarter due to bad weather in Western Australia and Queensland. Rio Tinto, BHP Billiton and Fortescue Metals Group will release their quarterly production and sales figures this week. March is historically the weakest quarter for bulk commodity producers due to weather issues. Port statistics show iron ore shipments from Port Hedland – used by BHP, Fortescue, Atlas Iron and BC Iron – fell 4 per cent in the March quarter to 66.9 million tonnes after a record December quarter.

8. Woodside will accelerate offshore plans to develop its Browse LNG project in a move estimated to be more than $US10 billion ($9.48bn) cheaper than the axed James Price Point proposal, providing leverage for an extra capital return to shareholders.

9. The landslip at RIO’s Bingham Canyon Copper project is huge and will take 6 months to sort ,in the meantime there is some talk that it is enough of a disruption to take away the surplus in the market. Didn’t help copper on Friday though down 2.4% on Comex.

10.And from some of the Masters that completely missed the oncoming GFC train… Policy makers from the Federal Reserve and the Bank of England said they see few signs of equity price bubbles in the U.S. and the U.K., countering criticisms record stimulus is stoking excessive risk-taking…..

And finally…..from another reader, thanks Hans…those of a sensitive disposition should finish reading NOW!

A dog lover, whose dog was a female and in heat, agreed to look after

her neighbours’ male dog while the neighbours were on vacation.

She had a large house and believed that she could keep the two dogs

apart.

However, as she was drifting off to sleep she heard awful howling and

wimpering sounds.

She rushed downstairs and found the dogs locked together in obvious

pain and unable to disengage, as so frequently happens when dogs mate.

Unable to separate them, and perplexed as to what to do next,

although it was late, she called the vet, who answered in a very

grumpy voice.

After she explained the problem to him, the vet said,

“Hang up the phone and place it down alongside the dogs.”

“I will then call you back and the noise of the ringing will make the

male lose his erection and he will be able to withdraw.”

“Do you think that will work?” she asked.

“It just worked for me,” he replied.

Clarence

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