COMMODITY PRICES ARE

GENERALLY WEAKER, as the US dollar is

generally stronger... with one material exception: the

precious metals are materially stronger too in US dollar

terms. This of course means that the precious metals are

even stronger in terms of the EUR, or the Rouble, or the

Australian dollar, or the Swiss Franc et al; but given that

most traders will view the precious metals in dollar terms

no matter how often we try to sway our friends, clients

and readers into pricing them in terms of other currencies.

Too, we think it is important to note the "divergence"

between the precious metals this morning... and on Friday

for that matter, for the changing relationship began to

show on Friday in N. American dealing... and the other

commodity markets AND the global capital markets too

For the first time in weeks, gold is rising as the global

equity markets are tumbling. For the first time in weeks,

gold is rising as crude is tumbling; it is rising as grains are

tumbling. For the first time in weeks, gold is proving to be

what gold has always been: a haven

Before we return to the gold market, we think we really

need to show just how massive has been the weakness

in the commodity markets of late, for we've never seen

anything such as this in our three decades of watching

markets... ever! For the month-to-date, the DJ-AIG Index

is down a truly stunning 24.8%. This is beyond

reasonable; this is shocking; mind-numbing; almost

borderline incomprehensible. For the year-to-date, the

same index is down 31.8%. The leaders on the

downside? Copper is down a stunning 41.4%, followed

hard upon by gasoline, which is down 41.0%, which is

followed by nickel, down 37.3% [Ed. Note: We note, at

this point, that nickel would be the weakest of the lot had

it not been for a massive rally on Friday, which took prices

7.0% higher in one day! Had it not been for that massive

short covering rally, nickel would be the leader to the

downside for the month. Such is the randomness and the

violence of the commodity markets these days!]

The best of the lot? Now, this is where the market truly

shows how stunning is the over-all weakness, for the best

of the lot is pork... which is down 8.9% for the month!

Think about that for a moment! The "strongest"

commodity for the course of an entire months is that

which has lost 8.9%! The next "strongest" is cattle, down

"only" 12.8%. Finally, the third "strongest" commodity is

coffee, which is down only 16.7%. We cannot remember

ever having seen any market anywhere that is this

manifestly weak to the point where the best is simply that

which has fallen the least! We stand in awe.

That having been said, we are long of gold, having bought

a first unit late last week after having stood aside from

gold for the past several weeks, wise enough... or lucky

enough, we are not certain which... to have remained

upon the sidelines as it plunged in prices to the

consternation of nearly everyone. Further, it is evident

that "someone" or "something" is a strong seller of gold at

the $740-$745 level, and it shall take a movement upward

through that level today to allow us to add to our present

long position in gold. Who that seller is is quite beyond

us, but for the moment we shall consider that seller to be

quite large; quite adamant and quite intent upon asserting

his or its will upon the market. It may be any one of the

European "legacy" central banks, who still have a good

deal of gold to sell and are intent upon doing so under the

Washington Agreement, or it could be "margin clerks" as

willing sellers of gold held by any one of the global hedge

funds who find themselves in a very awkward position

and have no choice but to sell what they can, when they

can.. or even "if" they can. Or it may simply be normal

selling by those who wish they've have sold previously

and have resting orders to sell on rallies. We've no idea

which it is, nor do we really care. The case in point here is

that there is selling to be done above the market, and until

that selling is sated, we cannot and we will not add to our

present long position. When it is, however... and we do

thing it shall be sated, if not today, then tomorrow, and if

not tomorrow, then later this week... we shall not hesitate

to add to our long: