Good Afternoon,

Proving once again that you cannot keep a market aloft with wishful thinking and/or cheap words, the commodity shorts enjoyed a day in the April sun today as everything tradable fell across the board, and the bulls ran for cover. At the end of the day, markets have always a function of the direct action of buyers and sellers, and the latter outnumbered the former in spades today.

Three buzzwords have driven the speculative action over the past thirteen months. The 'yen carry-trade' mantra was followed by the 'subprime debacle' explanation, and we know what all of that led to. Now, a new word has made the top ten list: deleveraging. cautions: No one knows how long the present deleveraging process will take or what its precise dynamics will be. We do know, however, that it will have to run its course, and that it is accompanied by deflation in asset prices until a new equilibrium is found. As history has shown, this process can be painful. - those sobering words belong to the head of the Bank for International Settlement ( a source oft-touted by the tinfoil clubs as authoritative - when it suits their Quixotic quests).

The unthinkable happened today, when, on the heels of massive losses at UBS and Deutsche Bank, the markets went into the most counter-intuitive rally seen in a long time. Witness the greenback rising .74 to $7.60 on the index, see the Dow gaining 305 points, and behold a commodity complex fall that will have speculators licking their wounds for some time to come. The severity of the drop had even objective market observers a bit taken aback.

Better than expected ISM figures and new equity offerings on Wall Street contributed to the rout as money was being vacuumed out of stuff and into paper. All bullish hopes are now pinned on the jobs situation coming our way towards the end of the week. You can hear the rooting just as loudly as you can hear the calls for the continuation and aggravation of the credit problem. Investors appear to feel a bit differently however. More are of the opinion that the tide may have turned.

As observed in yesterday's closing commentary, gold prices looked poised for a sub-$900 dip amid an eroding commodity complex. Well, the metal followed through on that tilt and fell quite hard to a low of $871.90 before climbing back to $882.50 later in the day. Crude oil prices fell to under $100 intra-day, while the US dollar rose sharply on the index - a combination that proved highly adverse to bullion values.

New York gold was down $33 at $882.40 per ounce at last check as selling waves hit the pits and participants remained on dollar-watch. Silver took some incoming as well, losing 37 cents to $16.84 as concerns about waning industrial demand hit copper and other metals and the dollar's new-found vigor -even if temporary- put pressure on commodities as an asset class. Platinum lost 72 to $1934 and palladium fell $1 to $440.00 per ounce. Some stabilization came in as the falls were seen as somewhat overdone. However, with three hours left to trade, the jury remains out on how this day will come to be regarded when it is over. It a matter of shades of black, however.

Look for more of the same as the days wear on. Perceptions that the credit crisis is ebbing will remain pitted against fears that the worst banking crisis in 30 years will drag the global economy down. Safe-have gold buyers will be pitted against risk-averse speculators who see a slowing economy as a valid enough reason to park funds in others assets. The technical and psychological damage is done. None of this will stop misguided pharisees from issuing more calls to arms with buy,buy,buy! with the loudest bullhorn (bull + horn) they can get a hold of. Again.

Like they did at the recent highs.

Happy Trading.