Montreal, Canada

In the span of just eight trading days this month, commodities have gone from red-hot to stone-cold as investors leave the space like a bad dream. I always find a selloff fascinating because investor behavior is so irrational; for the value based bargain hunter, corrections provide a great entry point to buy quality investment ideas or themes at a discount.

Funny, but judging by the price action in agriculture, mining and energy you’d think China has stopped buying raw materials on May 2. This is hardcore selling!

Though there isn’t a specific trigger for the correction – hedge funds, George Soros, CME margin hikes, Chinese inflation – the fact is we all knew it was long overdue since commencing a parabolic rise last summer following the Fed’s QE II announcement.

A bunch of sub-commodity sectors have been trashed this month and will take another hit as the market opens shortly.

Gold and silver mining stocks have been pulverized. Look at companies like Barrick Gold (NYSE-ABX), down almost 20% since late April after announcing a major copper mining acquisition. Then there’s the dog of the gold stock world, Kinross Gold (NYSE-KGC), trading at the same level as it did in 2006. The stock sits at a 52-week low and sells at book value.

Let’s move on to offshore drilling. This is home to the biggest long-term profits and cash-flow in the energy sector. Most drillers were already trading at expensive valuations heading into May but after more than a week of hard selling, many are now worth nibbling at these prices. The best performing ETF in the space, SPDR Oil & Gas Equipment Services (NYSE-XEF), is now down more than 21% off its all-time high. Also, there’s Noble Drilling (NYSE-NE), selling 40% below its all-time high and continuing to be bashed.

Finally, the USDA’s crop projections report yesterday threw a monkey wrench at the grains complex. I’m sure the USDA’s bullish crop forecast won’t materialize. The fact is grain inventories are already in a long-term decline and global production is lagging demand since 2008. That’s a long-term trend that won’t change any time soon, exacerbated by volatile climate change; I’m a big buyer of the grains at these levels and I also like Archer Daniels Midland (NYSE-ADM), chopped to pieces lately.

I’ve started to accumulate the above securities and commodities. I call it cherry-picking. I don’t think we’re near the end of the blitzkrieg. But when prices come down this fast in the commodities sector, I’m a buyer. China won’t disappear and won’t suffer a recession. And the Fed has already lost its marbles with more asset purchases coming our way in 2012, if the economy falters or falls off a cliff. Buy the dips.

I’m off to Expo 2011 in San Diego where I’ll be speaking on Saturday. See you on Monday.