Let Them Eat Crab Cake

Last year, but some horrible trick of the internet, I wound up on an email list for a posh local caterer, a company known for delivering wallet-crushing blows in the form of organic artichoke crostini.  And as the increasingly unemployed world turned its back on organic artichokes sometime in November, the owner seemed to have had some sort of psychotic break, hammering out a now-infamous manifesto that she then emailed to the company’s entire list.

It began with “in this economy, it calms me to iron my rare silk shantung napkins” and ended, in a feverish shriek, with “we will only use the finest blue crabclaw in our crab cakes or we will go down trying!”  Clearly imitation crab means that the terrorists—or Madoff, or AIG—have won.

The natural resource sector, however, if you’ll pardon the horrific pun, has been thriving on crabbiness, even before the tragic demise of overpriced crostini.  We soothe ourselves by smoothing the familiar linens of worst-case scenarios and “if that, then this,” and we vow to buy into only the finest catch of gilded pessimism—or go down trying. 

And it’s comforting, at the end of the day, to feel as if we know where the bottom is, even if no one, save for raving catering managers and the similarly insane, is feeling around for it with tippy-toes.  But in looking for the next sharp descent, in predicting and planning for downfall and destruction, we forget that ours is a sector of unmatched resiliency and indomitable growth.  We fixate on the fact that we need soothing, rather than realizing that we are doing so by pressing premium silk. 

Take, for example, this week’s initial smattering of news and commentary.  The predominant headlines centered on the projected 44 percent decrease in India’s June gold import and the yawningly static fizzle of the day’s gold price.  The pessimists tromped dutifully over to the “gold is flat” side of things, while the optimists pointed with Cramer-esque excitement to signs that gold is about to “explode.”  This leaves us nowhere.  Whether we are ironing our shantung napkins or giving up and ordering Krab-with-a-K in bulk, we’re still fixated on some hypothetical point in the future, even when the present has still not completely unfolded.

When we dissect the sector’s news each new week, we must, difficult though it may be, wait for all of the actual news.  At a highly caffeinated point in history in which everyone expects everything 5 minutes ago and no one is interested in anything short of a soaring triumph or a blazing apocalypse—take your pick—we’ve all gotten terribly bad at reading comprehension.     

Let’s humor our 4th-grade teachers for a moment, and truly catalog and comprehend the events of the sector, rather than establishing a categorization for our market mood swing of the week and then scanning the newsfeed to reinforce it. 

For starters, there have been significant developments among the majors, including increased projected outputs, new or newly resumed projects, and a smattering of joint ventures and financings.  Positive signs of a steadily evolving sector, to be sure, but even if the majors all put out news releases announcing that they had decided to dedicate a portion of each property to reconstructed cave paintings, it would be a step in the right direction.  Because this, if you hadn’t noticed, is June.  And after that comes July.  Remember when those two months comprised the phenomenon referred to as the Summer Doldrums, when no one did much of anything and everyone was too busy sipping mai tais to be bothered about the spot price?  Me neither.

Of course, it’s hard to think about what this brave new world of actual substantial summer news releases means with headlines like “Gold falls for first time in five days” staring you in the face.  Oh five-day gold rush, we hardly knew ye.  No matter that dissecting a one-week gold chart and basing any sort of forecast on it is akin to picking stocks based on which symbols spell out “Billy Jean is Not My Lover.”

Tributes to the late King of Pop aside (though one could probably craft a brilliant parallel between the lyrics to “Thriller” and the business-section headlines between October and December 2008), the point is that dissecting natural resource sector news each week requires just that—dissection.  Reading only the bolded headlines, listening only to the loudest voices, and repeating the opinions of others rather than forming one’s own are actions that will spin the brightest of gold bugs into a sodden cocoon. 

There are significant events unfolding in this sector, even in these once-sleepy months, and none of them are particularly mysterious.  Look to these events—these actual, humble, concrete and tangible events—rather than the second-by-second spot prices and the cloudy crystal balls, and the natural resource sector becomes what it should always be; a coherent string of linear developments, rather than an intractable mist of prophesies and predictions.  It is the difference between paging through a good old-fashioned newspaper and following CNN on Twitter.  The former will tell you how to dress for today’s weather; the latter will tell you what Jon & Kate Plus 8 wore to their divorce proceedings.  And personally, I’d rather know when to bring a jacket.

Follow the action in the majors; watch it trickle down to the juniors.  Keep an eye on global physical gold demand, not just the fickle shifts in individual imports.  And for goodness’ sake quit stalking the daily gold price before it slaps you with a restraining order.  True, there was a time when such minute analysis was everyone’s daily bread.  But these days, perhaps, it is better to let them eat crab cake.  Or krab cake, as it were. 

Sara Patterson

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Mrs. Patterson began her career as an at-large columnist for The Daily Tar Heel.