Morning all,

Such sad news from Boston, how could anyone plant multiple bombs at a running race is beyond me, anyway…

Dow collapsed as did Gold and other commodities..even Oil!

The conventional wisdom is that Gold is a haven in times of trouble. When people do not trust Governments and the printing presses are running hot, then Gold is a haven. When inflation is looming due to printing fiat currency ,then Gold is a haven. When crisis like Cyprus appears then Gold is a haven..when North Korea threatens Nuclear Armageddon then Gold is a haven. Well that’s NOT worked too well. The panic in commodities markets has shown just what happens when a crowded trade goes bad. All the Gold bulls, I have to admit to being a semi Gold bull, have been carted. Last night’s move was the biggest fall since the good old days of a Russian Invasion of Afghanistan in 1980!Not  pretty and there is still a lot of smoke out there on this one. Huge volume and huge moves. Of course those investors who have gold shares in their portfolios are going to be hit hard. Yesterday was bad enough but today will be equally bad I suspect. Our futures market is down 63 but I suspect we may see the hundred up at some point.

News from China yesterday also upset the apple cart somewhat as the GDP missed expectations. The we had a terrorist attack on the Boston Marathon just to make it a great day all around.

Now for avid readers you will know that I have been advocating buying BHP at current levels…well we should see more pullback today as resource stocks get hit. I am still a nibbly buyer of these things but it appears that with the World falling apart in commodity land there is no great hurry. The ‘buy banks sell resource’ stock trade will be back in force today with financials expected to fare better than the commodity stocks.

I have been saying for a little while that I thought the best of the market was over for a while and that Easter usually represents a highish point and therefore expected the market to trend sideways for the next quarter..the old sell in May and go away routine but NEVER considered that Gold and other commodities would take the bath they have..I was caught napping by this extraordinary move so I apologise for all my ramblings on nibbling away at Gold stocks like BDR and buying Iron Ore stocks like BHP and RIO on the back foot…I got it a bit wrong .

Idea of the Day

Hard to get inspired on a fresh idea especially when the markets are so negative. Expect to see some panic selling as the crowded trades get less crowded and take their toll  .when someone shouts fire it’s hard to get to the exit first…the rational logical person says look for some bargains amid the carnage ..the emotional side says keep away and take the pain and wait for the dust to settle…I think emotional will win…sidelines and watch may be the way to go..for the brave there is going to be some bargains but they may turn out to be illusionary ..fool’s gold perhaps!

Things to make me go mmmm!

1.We have had a couple of times in the last few years when Gold took a huge whack..Gold got whacked 21% in a few days..then we had Lehmans a few months later and in September 2011 Gold slumped 20% in a few days just before Zombieland imploded and Central banks had to come to the rescue. Maybe Gold is a leading indicator of troubles ahead.

2.Interestingly last night Super Mario ”whatever it takes’ expressed worry that all the money he is pumping into the system is not finding its way into the business sector at all..well we know it’s just going into punting capital markets which causes bubbles and hysteria on the buy side and the sell side. Again this has caused crowded trades in US equities and Gold etc..last night we saw what happens when everyone wants to exit at the same time!!

3.Spare a thought for Billionaire hedge Fund manager John Paulson who has dusted $1bn in the last few days on his Gold bet!Still got a few left but that’s gotta hurt …

4.This shows you how crazy things have got with ETFs.. futures sell order worth $6 billion, equal to 4 million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting and spooked the markets contributing to the decline. The order was believed to have been placed through Merrill Lynch’s brokerage team. Gold futures with a value of over 400 tonnes were sold in hours and this is equal to 15% of annual gold mine production.

5.Good luck with this one.. Aethon is already a candidate for the worst-timed IPO of the year with mining services play. Aethon Group due to launch its offer as investors dump mining services stocks. Aethon, which derives most of its revenue from Queensland’s Bowen Basin, met investors in Singapore and Hong Kong last week and is making its way through Sydney and Melbourne fund managers. Denver Gold conference will be interesting as well!!

6. Rio Tinto subsidiary Coal & Allied slammed the NSW planning process after the Land and Environment Court overturned the approval for its Hunter Valley-based mine extension. Coal & Allied said 1300 jobs were at risk after the court blocked the 2012 development consent for its Warkworth mine extension.

7. Woodside Petroleum is looking to spend some extra cash in Canada after shelving its controversial Browse project in Western Australia.The oil and gas giant, which recently slated more than $2.5 billion for projects in Israel and Myanmar (Burma), said the next stop on its diversification push could be the west coast of Canada.

8. Iron-ore swaps fell the most in two weeks on speculation slower-than-estimated Chinese economic growth will curb demand from the world’s largest importer of the commodity used to make steel.May contracts slid 2.9 percent to $136 a dry metric ton, according to broker SSY Futures Ltd. That’s the biggest decline since April 1, based on data from SGX AsiaClear, the largest clearer of the derivatives.

9. Until the moment she actually sinks, the Titanic is unsinkable.–Julia Hughes…and it was 101 years ago that the Titanic sank 15^th April..bit like the Gold price really!!

10. China’s economy has produced more mixed signals about its bumpy recovery, with an unexpectedly slower rate of growth jolting global markets and highlighting the difficulty facing its new leaders in pursuing deeper economic reforms.

The gross domestic product of the world’s second-largest economy’s grew 7.7 per cent in the first three months of the year – a weaker than expected result that lowered the Australian dollar and most mining stocks on Monday.GDP had rebounded to 7.9 per cent growth in the final quarter of last year, marking the end of a two-year slowdown, and analysts had expected China to have an even stronger start to 2013. But sluggish industrial production and retail sales instead revealed an unexpected softness in its economy. However, China’s first-quarter economic data is notorious for throwing up red herrings due to the disruption of the Spring Festival (or Chinese New Year) holiday period.

And finally………..all our thoughts are with the City of Boston and the families of those killed or injured in this terrible act of terrorism. Mindless, senseless waste of human life.

Clarence

XXX

 

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