“April is the cruelest month,” wrote T.S. Elliot in “The Wasteland.” And what a month it is: it begins with a day for fools, and then on the 15th we settle our Federal tax bill. And for precious metals holders, this April finished with all of us feeling a bit poorer.

As I write this on Friday, April 30, 2004, gold is trading near a six-month low of $387; silver is struggling to top $6.00 after fixing in London yesterday at $5.55, which was a loss of some 32% in a month’s time; platinum is now trading sub-$800, where it has been most of this week; while palladium at $256 has lost about a quarter of its value in this dreadfully un-precious month.

What happened? Why did the precious metals decide to take a month off during a period of commodities price inflation?

This week, word was out of a possible economic slow-down in China, a realization which had the effect of pounding prices on all the metals, from copper, zinc and lead, right up to the entire complex of precious metals.

And earlier this month, hints came from the Fed that short-term interest rates are now possibly preparing to commence to start to rise. Just the idea of higher rates in the future supplied further strength to this month’s dollar rally, in which the US currency has gained significant ground against the euro, yen, pound, Aussie dollar, etc. And, of course, a stronger dollar means lower prices for the precious metals in dollar terms.

Others apportion blame among the Rothschilds, the actions of momentum-driven commodity funds, and that infamous Anti-Gold Cabal of International Bankers so often impugned within the shadowy dungeons of the Internet’s gold forums.

But battle-proven commodities traders who, they would tell you, have seen it all before, will simply share with you those old truisms:

Nothing goes straight up,

Trees don't grow to the sky,

If making money in commodities was always easy, then everyone would do it,

And that perennial cliché, a truism in any market, those pithy two words to live by when a 3-year long rally is shaken by a correction:

Stuff happens.

-Richard Smith