Three things I’m thinking about today…

1. Shares look to be in no man’s land…

After all the action last week, the share market is drifting around right now without clear direction.

The big sell down has stripped any investor enthusiasm right away.

Short term, it’s hard to get excited about anything. That said, it’s the long term that usually matters.

On Monday, I wrote about Lynas [ASX: LYC] as a beneficiary of the trade war, because China is restricting exports.

Here’s another idea I’ve seen floated: Select Harvests [ASX: SHV]. It’s a collection of almond farms.

It just so happens that California is the biggest producer of almonds in the world. And Trump just cut them off from their biggest export market.

Australian growers will benefit from this as long as it lasts.

I’m not saying buy SHV. There are lots of variables that go into an agricultural stock like that.

It wouldn’t be my preferred type of buy in ‘normal’ times for that reason alone.

SHV has also been rising for a while- since November.

I guess the market was already running this up on the assumption ‘Liberation Day’ would give its earnings a kick.

Might be too ‘obvious’ now as a trade idea. Long term, I’m not sure – I don’t know enough about it.

You do wonder what the old almond farmer in California thinks.

Trump’s tariffs are already slugging Americans in all sorts of ways.

Travel bookings are down. Soybean farmers are losing market share to Brazil.

I’m a bit of a photography nut. I checked on a photo blog casually last night. Of course! I hadn’t even thought about this angle.

US camera dealers are cringing at the price rises in a low margin business already. All their stock comes from Asia.

A good chunk of them will finally be sent to the wall, one would think. It’s been a tough business for a long time.

The big headlines about semiconductor plants now destined (supposedly) to be built in the USA obscure these smaller stories.

That reminds me…

2. Speaking of stories, there’s been no bigger story for the ASX this year than gold.

A word of caution comes from Michael Howell, over at CrossBorder Capital.

He shows the current skyrocketing gold rally has blown past its usual correlation to liquidity, as you can see on this chart…

We have also reports hitting the newswires about big gold price projections. Going long gold starts feeling a little too ‘easy’.

I’m not saying I’m jumping off the gold bull long term.

But all markets correct and dip and buck off a few weak hands. It might be time for that to happen in the gold price.

That said, long term there’s still so much to like about the Aussie gold sector. Exploration and development are going to surge here.

My last report for my advisory Australian Small Cap Investigator was on a cracking gold story in the junior resource space. This is not just dependent on a rising gold price.

It’s an exploration campaign that could blow the socks off the market if it comes off. And if it doesn’t? Well, that’s factored into the plan too.

The investment idea in that report was one of the few to sail through the market crunch too. A good sign!

I’ve already told my guys: any dip here is one to buy. Go here if you’re interested to learn more.

3. One thing to remember in resources too…

By the way, one thing to remember when it comes to resource bull markets is to always grab a basket of names, if u can, rather than just one.

Why? You might end up with a BGL. What am I talking about? Despite a surging gold price, gold stocks skyrocketing…there’s always one that shits itself.

Bellevue Gold [ASX: BGL] is that stock this time. They’ve run into production problems at their project.

The share price is now cut in half since 2024. They’ve just had to raise a huge amount of money (again) to get their debt down and stabilise their finances.

You can never be certain which mining project might run into unexpected trouble like this.

Better to diversify across at least 3-5 names. If it’s a real bull market, most will go up anyway.

Best wishes,

Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator

P.S: Our team here at Fat Tail is now actively on-the-scout for buying opportunities in bombed-out stocks. Especially US stocks. This is our primary recommendation.

Murray’s Chart of the Day
– Chinese Yuan Monthly Chart

By Murray Dawes, Wednesday, 09 April 2025

We are witnessing a serious trade war erupt between China and the US, but you would be forgiven for thinking that nothing is going on if you looked at the Yuan.

The chart above shows the US dollar vs the Chinese Yuan (USDCNY). So when the candles are going up it means the US dollar is getting stronger and the Yuan is getting weaker.

The usual path of currencies when tariffs are installed is that the tariffed country’s currency falls.

But the Chinese Yuan hasn’t budged. What is going on?

We have seen heavy selling in US bonds recently which had many analysts scratching their heads.

If China is selling US bonds and buying Yuan to support the currency the weird moves in markets recently would make sense.

China may also be buying gold to continue their diversification away from US treasuries.

They will also get the added benefit of forcing US interest rates higher just when Trump is trying to get them down before a huge rollover of US debt occurs this year.

Keeping an eye on the USDCNY as we move forward will be instructive about what is going on behind the scenes in the bond markets.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps