The BarkerLetter

Greetings investors!

I love the financial news networks!

They spent all last week predicting a recession in the U.S., and now they’re predicting its end. In fact some are saying we’ve turned the corner, even though we haven’t even seen any data to suggest a recession has occured in the first place.

Oh, and would somebody please explain this Bear Stearns bailout to me, because I just don’t get it at all!

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People want to know where metals prices are headed. I don’t know.

Lately we’ve been channelling Britney Spears for investment advice, since she seems to know about as much as anybody else these days. Here’s what she said about minerals: ”….oh … well, like, see, a long, long time ago … like way back when you were probly … oh I don’t know… about 40? Yeah, like waaaaaaaaaaaaaaay back before they even made iPods? In those days copper and zinc and nickel prices went down …ummmmm….at the start of a recession as order books emptied and inventories built up. Then when like that whole recession … thing …. just kinda  reached the max well then prices would rebound as demand picked up…‘

Interesting. So according to Britney the supply and demand cycle for minerals runs well ahead of the economic numbers.

So if we’re in a recession, shouldn’t commodities pricing be heading into the tank? Or rather, shouldn’t they already have done so? Well sure but here’s the thing — there are so many speculators in the works that pricing may no long reflect the relative position of the business cycle.

I think we could conceivably have a ‘manufactured’ recession, predicated solely on the unwinding of a prominent hedge fund or two. That sort of event is like the wheel coming off the cart. It’s impossible to predict which way the cart is going to careen or swerve. Actually at that point, the game plan is just staying out of its way.

But let’s talk about something more jolly –  like where and when the next major gold discovery is going to occur. More about that in subsequent editions.

Careful out there.

Kb