Well as I wake up this morning I am greeted with a voicemail message, not good I think.  ”Mr. Kerr this is Anthony at RCG…(UH OH) You sold your June gold at 925 on a stop, have a nice day!”  Morning sunshine!  It’s always nice to wake up to losing several thousand dollars…lol  Losses are a part of trading and I always tell people this, granted they are not a fun part but truly necessary.  

Ok now bear with me while I get a bit philosophical on you.  How we handle losses is as important as how we handle winners.  It is important to keep everything in perspective.  Now this account I have the gold in was a small account and over the past 3 months I have taken a good deal of money out of it…In dribs and drabs here and there.  Certainly more than I have now lost.  So in actuality this correction and subsequent loss is not as dramatic as it could have been.  And I am going to need the write off anyway.  See the glass can be half empty or half full, it’s up to you.  

The most important thing is never to let a loss break you down or blow you out.  In other words let your account go debit or some other nightmare.  Don’t be that guy that we hear about on TV.  Set your limit and then take the loss.  Trust me it will clear the decks and then you can proceed on. If anything in all this my worst mistake was absolutely unforgivable…I didn’t even take my own advice…

Here  I am last week saying that commodities are ripe for a correction and yet I held onto some gold…  You see sometimes you can give good advice that you just can’t heed yourself…i.e Governor Elliot Spitzer comes to mind.

Anyway, if you haven’t already be sure to check out my clips on Kudlow & CO. and CNBC’s Squawk Box last week and Monday where I say we are headed for a big correction.  Now let’s look at why commodities are really pulling back so sharply…

Basically what we have is a global margin call a wave of liquidation.  Is it really that anyone believes the Fed is about to start supporting the dollar?  It seems like wishful thinking at the very least.   Heavy job losses, mounting inflation, and constant interest rate cuts to appease Wall Street have put us here and now we have to take it.  

Hot money is getting sucked out of commodities as well it should.  Many of them moved too far too fast.  Gold, oil, the grains markets all had become un-tradeable, as they basically became detached from any sort of market fundamentals.  Now with these dramatic pullbacks we will see certain commodities return to very attractive buying levels and the grain markets are the first ones on my radar.  Precious metals and oil will take longer to recover and soft commodities, well they are on a case by case basis.

The most important thing to understand is this is a correction, albeit a dramatic one and a reminder of how volatile these markets can be.   However, it is in times like these when we get necessary yet knee jerk type reactions, that we really take a long look at the landscape and see what has been oversold and why?

Again, if this selling is merely on fund liquidation and profit taking then so be it.  Maybe that means that down here some of the commodities got thrown out like the baby in the bath water and may well be a bargain that on the next move higher.  You may have to act fast because we may not see the chance for again.   Again grains seem to be the best bet.  More on this from Singapore while I am there all next week. 

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 Group hug in South America….

The 1  hour war I was at the Newscorp building most of Friday afternoon, in NYC.  I was shuffled from one studio to the next and as I was I watched as we went from shots being fired over the border of Columbia and Venezuela to an hour later a group hug between Chavez and other leaders.  The “war” is over. 

 I think what happened was that Chavez realizes Columbia has an army that would clobber him and with the happy backing of the US, and all the multinational companies he screwed when he nationalized the oil industry.  So rather than take a chance at Columbian tanks rolling on through to Caracas, and along the way taking back oil facilities….He thought about it and decided on hugs not drugs.  And whatever drugs he is on they must be powerful. Anyway, the good news is that what goes up eventually comes down, and oil is not immune to that equation. With oil at $106 and yet plenty of immediate supply on the market something has to give, at least short term.  Remember, $15-$20 of the oil price is speculative and that money swings either way…There is no doubt oil prices are going higher..and higher…and higher….LONG TERM. 

 That isn’t to say the downside will not provide opportunity too. Q2 is typically a period of time when we see slower demand for crude oil year after year and also it is a time when refineries shut down for seasonal maintenance.  Look for a temporary pullback in crude at least until May…  When the pullback comes it could be swift but is not likely to go much below $85 or certainly $80 which is the new”floor” set by our “friends” at OPEC.   With friends like that who needs enemies. Anyway, Terry Keenan was filling in for Neil yesterday who I hope is safely on his way to Florida for vacation.    

Have a group hug with Hugo!         

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Ok so here is my new blog and boy oh boy is it nice.  Look for regular daily entries starting Monday.   Meanwhile check out my brief appearance on Kudlow & Company last Friday!  Enjoy Assessing Crude Realities 

 

 An outlook on commodities, with Kevin Kerr, Kerr Trading International; Jim Awad, WP Stewart Asset Management ; Michael Pento, Delta Global Advisors, Inc.; Craig Columbus, Advanced Equities Asset Management; and CNBC’s Dennis Kneale.

 

http://www.cnbc.com/id/15840232?video=669483688 

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