By MoneyMorning.com.au
I’m writing this letter to you from the road in France.
After months of headlines focused on Europe’s demise, it is good to get over here and have a look at what’s really going on in Europe from street level.
Frankly, you’d never know anything was wrong. The shops in Paris were busy, nothing was reduced in price, and service was just as snooty as it has always been. Grand French dames were walking down the street with enough pearls to pay off the Greek debt. Everyone was so dolled up that when I saw my reflection in the mirror I thought I was looking at a homeless person.
We also went to see the Red Hot Chilli Peppers concert while we were in Paris. Even though they are pushing 50 and tour with their kids these days, the band put on a hell of a show. And despite the ridiculous price of the tickets, the place was still packed to the rafters.
La Economie?
It seemed fine from what I could see.
But so much hangs on the resolution from the meetings taking place. The markets have essentially been treading water most of the week in anticipation of some ‘big bazooka’ solution.
According to ANZ Commodity Research:
“Risk appetite for commodities has sharply improved… [but last night] commodities ended the session mixed, as sentiment-driven buying on hopes that the European package can stabilise non-core Eurozone sovereigns ran out of steam. Markets remain nervous ahead of tonight’s EU summit, with negative European headlines and downbeat US releases driving a negative market tone in a risk-off session…
“Markets were initially buoyed by news that German policymakers had supposedly agreed to vote on a joint motion for the EFSF tomorrow, and that it would likely pass. However, a subsequent headline about tomorrow’s EcoFin meeting being cancelled (meeting of the EU’s finance ministers) was then misinterpreted as a cancellation of tomorrow’s entire debt summit, illustrating just how fragile market sentiment is.”
Indeed, commodities were up 3.72% since Friday at last night’s close.
But as investors got twitchy last night we saw a couple of big moves in gold and silver…
This probably signals investors are moving back into gold and silver as a safe haven asset and hedge against a currency collapse, just in case the leaders of the European Union fail to come up with a plan to contain the European debt crisis. Or worse, stuff it up.
There isn’t much firm news from these meetings to go on yet. We’ll have to wait and find out what that resolution will be tomorrow morning…
Until then, I’ll continue to watch the market (and mining and resources stocks) with interest… But things are more than ever still in the hands of a few European politicians. And it’s worth waiting to see what we’re up against before making any big moves.
Dr. Alex Cowie
Editor, Diggers & Drillers
P.S. Despite the current climate, I’m convinced you can still track down profitable small-cap resource companies in this market. In fact, I’m REALLY bullish about three current picks I found using a unique method I devised especially for Diggers & Drillers. I’ve honed this technique over the last couple of years to help identify the best diggers and drillers on the ASX for my readers.
To find out what it is and how it could help you track down profitable small-cap mining stocks (before the rest of the market finds out), click here…
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