I’m still on the road. Here are a few things catching my eye.
I see that oil is up near $120 again this morning. Apparently, the markets are worried about Iran now. There’s nothing new about Iran that we didn’t know on Monday, so what’s changed? I think the market is oversold; maybe some of that is working its way in to the broad trader consciousness. The fact that the European Central Bank disappoints the chin-nodders of CNBC by stubbornly refusing to cut rates – which boosts the euro and hurts the US dollar – may also be supporting crude prices as well.
But the fact that an important Turkish pipeline can blow up and oil DOESN’T jump $10 a barrel shows, I think, that the overall mood in the oil markets remains short-term bearish.
Now, there is other news I think the market should be worried about, as I pointed out yesterday. Add to that, Nigeria’s oil output seems to be sliding down the slippery slope, putting in the good company of countries like Mexico, Venezuela and Russia.
Meanwhile, there is other news in the precious metals arena. Gold production in South Africa is falling off a cliff, down 12.3% year over year. Remember when South Africa used to be the world’s #1 producer of gold? Not anymore. Also interestingly, Mineweb.com says a wave of gold mine consolidation and takeovers has begun. Put the pieces of the puzzle together my friends, and it points to higher prices.
Gold is strengthening this morning, but market watchers are saying it’s due to more credit write downs at big banks. Do more credit writedowns really surprise anybody? Seriously? Well, then, I think they better hold on to their hats for the storm that’s coming their way.
Meanwhile, a crisis in municipal bond markets is rearing its ugly head. Yeah, I think metals are starting to look pretty good.
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