‘Zapata’ George points out that the extreme cold spell in February in Albertain Canadameant that the tar sands couldn’t be mined. One refinery in Edmontonhad no oil to refine, while the larger Strathcona Refinery was running at significantly reduced rates due to ‘operational problems’.

He then mentions Australia, where there are currently gasoline shortages. BP and Shell have apologised, citing ‘constraints on imports’ – ie they’re not getting the oil - leading to ‘unprecedented level of fuel shortages’. At the moment, the four biggest oil refineries in Australiaare not operational.

Meanwhile, says George, the Chinese have done deals worldwide where they will agree to pay market rates, but have the right of first call on oil production. Chinese oil demand went up by 6.5% in February, and their oil imports have risen by 18.1%.

In brief, the Chinese are getting the oil, while Canadaand Australiaare going short.

Will ‘Zapata’ George be proved right? Watch this space …

It's widely accepted a proper bear market is defined as declines of at least 20% over two months or more. We also know that no politician wants a bear market on his or her watch, particularly during an election year. In October the S&P peaked at 1,576 and fell to a low of 1,270 in January and again in March. That is a decline of 19.4%. It's amazing how the buyers stepped in at just above the 20% decline mark, isn't it? Officially there's no bear market. So what's all the fuss been about?

It’s a different story in the gold mining sector however. That 19.4% decline in the S&P has taken about five months and put the financial world in crisis. Yet a fortnight ago the XAU, the index of the major gold and silver producers, went from 209 to 168 - a decline of 19.6% - in just four days! Gold is a volatile beast.

Moreover, that was the majors, the safe, steady ones. The juniors were even worse. The fact that we can see these huge sell-offs in gold and silver, that traders are so happy to get rid of their positions at the slightest suggestion of a correction, shows how much fear there is. People still don't believe in gold. If they did, they'd hang on to their positions no matter what. This still prevalent fear suggests to me that in the grand scheme of things this bull market is still immature.

However, we might see some turbulence up ahead. As I've said before, gold tends to move up in phases - a six- to nine-month rise, followed by a year or so of consolidatory whipsawing action. Now that gold has touched $1000, but couldn't break it, it may be that we are in for another such period: a traders' market, a period of false breaks to the up and downside, before the next big leg up.

Maybe, but I'm not selling anything. If we do decline further, there'll be strong support around $850, more at $800, and more at $725. The obvious point of resistance to the upside is the big $1,000.

I doubt any sell-off will be as severe as May 2006 as the run-up was less parabolic, even though the past fortnight has been pretty painful. But if gold returns to the 200 or 300-day moving averages (at the moment, around about $770-$780) that will be a major long-term entry-point for any purchasers of physical bullion.

Of course, I may be completely wrong. We might have already seen the bottom and be on our way to pastures new. I hope so. But I doubt it.

Turning to the wider markets…