It's All Greek To Me...
Most of today was all about Greece, and how this convoluted country is causing upheaval in financial, currency, and metals markets. When Greek politicians decided they wanted to renegotiate a deal with the big Euro countries, that has been renegotiated at least twice. Bottom line, the Greeks want a bigger dole and rescue package from the Germans. This caused gold to reach all-time highs against the Euro, at E850/oz. This level struck as a bit ironic, as it was this same level that gold reached against the $ during the peak of the 1980 inflation cycle. $850 in 1980, E850 in 2010, 30 years later. One cannot put a limit on how irresponsible politicians will behave, and the rush into gold by hot money around the world says that the Euro has bigger problems than the dollar, if that is at all comprehensible.
Cotton moved in sync with industrial markets today, as this sector had a collective negative day. Spreads were more active than outright, and this is probably as it should be. The invert rather than the price of 85c has been much more active as a deterrent to buy, hold and use cotton. When May traded 800 over the Dec, it represented a full 14c, or $70/bale premium to use cotton now vs 7 months later. The swelling of cert stocks past 800 kb tells us that there is plenty of extra cotton to meet pipeline needs through summer. The Dec contract is behaving as an anchored pivot by which the old crop months swing wildly about, as the rationing process goes on. Cotton is giving us a textbook example of how some tops are made, in that the May took its turn with a contract high on 1 Mar, then backed down, and now the July took its turn with yesterday's thrust a few ticks above its 1 Mar high. We still like the bear spreads, but would not enter new positions now.