Commodities bubble continues to burst

[Chris]

NEW YORK (CNNMoney) -- Commodities continued to sell off on Friday, with oil and silver sliding to their lowest levels since mid-March, as the dollar remained strong. Investors also remained on edge ahead of the government's closely-watched jobs report.

Oil slipped 3% early Friday to $96.85 a barrel. On Thursday, crude sank nearly 9% -- the biggest one-day percentage drop in two years.

Oil, silver prices continue to decline ahead of jobs report - May. 6, 2011

 

[Mr. H.]

Oil's well that ends well.

 

[PLYMCO_PILGRIM]

NEW YORK (CNNMoney) -- Commodities continued to sell off on Friday, with oil and silver sliding to their lowest levels since mid-March, as the dollar remained strong. Investors also remained on edge ahead of the government's closely-watched jobs report.

Oil slipped 3% early Friday to $96.85 a barrel. On Thursday, crude sank nearly 9% -- the biggest one-day percentage drop in two years.

Oil, silver prices continue to decline ahead of jobs report - May. 6, 2011

Nice.

If silver drops another 15% and we decide to raise our debt ceiling i'll be dumping another 15% of my cash savings into a few kilos of silver.

 

[KissMy]

The commodities correction ended when the jobs numbers came out this morning. I would buy before the QEII deadline in June. There is no way the Fed will stop printing money on that date. Commodities will rally when Bernanke announces that they will continue.

 

[uscitizen]

The commodities correction ended when the jobs numbers came out this morning. I would buy before the QEII deadline in June. There is no way the Fed will stop printing money on that date. Commodities will rally when Bernanke announces that they will continue.

I expect you are correct. But think about why this is so?
Not a necessarially a good thing for the long term.

 

[Toro]

Silver has been crazy but I don't know if the bubble has burst for commodities, or if it is even a bubble.

Generally, bubbles pop when monetary conditions are tight. Conditions are still very loose. The end of QE2 may cause a selloff, but the end doesn't mean it's tight. It just means the easing has ended, two very different things. The tech and housing bubbles didn't end when the funds rate was at 3.5% and 1%. They ended after rates had tightened to 6.5% and 5.25%. We are far far from the top of the monetary cycle.

But maybe it's different this time, I don't know.

Remember that the worst stock market decline in 1987 happened in the middle of the greatest bull market in stocks in history.

 

[waltky]

Commodities dive...

Commodities Rout Drives Oil Below $100
MAY 5, 2011, A surging dollar and a collapse in oil prices roiled commodity markets, as fears grow that high costs for energy and raw materials are undermining the global economic recovery.

A months-long rally in the prices of basic goods has shown cracks in recent weeks, pressured by a barrage of economic data confirming that $4-a-gallon gasoline and soaring food prices are hurting businesses and straining consumers' budgets. That lack of confidence was pivotal in spurring a hectic retreat by investors who had bought commodities—particularly silver and oil—as a hedge against a steadily weakening dollar. The greenback abruptly changed course shortly before the U.S. trading day began, when European Central Bank President Jean-Claude Trichet failed to invoke the word "vigilance" when speaking about inflation, denting expectations for quick interest-rate increases that would enhance the advantage of holding the euro over other major currencies.

By midafternoon, the dollar had jumped nearly 2% against the euro, and oil prices had closed below $100 a barrel for the first time since March 16. Silver futures settled down 8%, at $36.240 per troy ounce, and off 25% since Friday. The strengthening dollar and sliding oil prices acted as a signal to abandon metals, grains and other commodities where concerns about rising prices and flagging demand also are on the rise. Most markets saw their first big drop Thursday morning from the twin hits of Mr. Trichet's comments and a U.S. Labor Department report showing claims for new unemployment benefits surging to 474,000, the most since August. Separately, manufacturing orders in Germany showed an unexpected 4% drop.

Commodities markets already were on edge due to this week's collapse in silver prices, as well as an array of indicators showing flagging consumption for increasingly costly raw goods. The arrival of $4-a-gallon retail gasoline prices across parts of the U.S. was seen as a potential turning point for the economy. Meanwhile, the U.S. Department of Agriculture reported weekly grain-export sales Thursday that were "poor across the board" as consumers balk at high prices, said Don Roose, president of U.S. Commodities in Des Moines, Iowa.

Copper prices dropped below $4 a pound for the first time this year, and gold also fell, with the gold contract for May delivery settling down 2.2% at $1,480.90 per troy ounce. Cotton fell 3.1%, while corn dropped 3% and natural gas sank 8.2%. "There's been a growing, nagging feeling about how well, or not well, the economy is doing. There are a lot of little dots getting connected," said John Kilduff, founding partner of hedge fund Again Capital. "This time around, $4-a-gallon gasoline is clearly doing damage to the consumer psyche and to the economy."

MORE

 

[waltky]

Rev. Pat onna PTL Club says gold prices gonna keep goin' up...

Commodity prices climb amid economic turbulence
Sun, May 29, 2011 - Commodity prices advanced during a volatile trading week in which investors weighed up the impact of weak US economic growth and an escalating European debt crisis on demand for raw materials.

They also tracked signs of slowing output in commodities-hungry China.

OIL: Crude oil prices rose as dealers tracked the dollar’s fortunes, weak US data, energy demand concerns and renewed jitters over the eurozone debt crisis. “Trading conditions continue to remain uncertain, following fairly disappointing economic data from the US and eurozone, uncertainty about a potential debt-restructure in Greece and weaker oil demand from the US, China and Japan,” said Myrto Sokou, an analyst at Sucden brokers in London. Oil prices began the week with sharp losses, tumbling on Monday as the US dollar strengthened on the back of more European debt problems. Prices were also pushed lower by indications of slowing economic growth in China, but then picked up sharply on Tuesday as US banks Goldman Sachs and Morgan Stanley raised their 2012 forecasts for Brent to around US$130 a barrel.

Data on Wednesday, showing a surprise increase in US crude stockpiles, took the gloss off that performance. US crude reserves rose by 600,000 barrels in the week to May 20, confounding expectations of a fall and indicating weak demand, while gasoline inventories jumped a huge 3.8 million barrels, in contrast to predictions of a drop. Gasoline demand is expected to pick up in the coming weeks as Americans take to the road for their summer holidays. Highlighting the week’s volatility, the oil market sank further on Thursday as disappointing US economic data dented investor confidence, before rebounding on Friday.

The markets were hoping for an upward revision from the initial reading of 1.8 percent in first-quarter US growth, but the figures were left unchanged. Economists said the data showed consumer spending was weaker than previously believed, with the high cost of food and fuel likely the reason. By late on Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in July was higher at US$114.67 a barrel from US$110.92 the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July climbed to US$100.35 a barrel from US$97.41.

PRECIOUS METALS:

 

[Oddball]

NEW YORK (CNNMoney) -- Commodities continued to sell off on Friday, with oil and silver sliding to their lowest levels since mid-March, as the dollar remained strong. Investors also remained on edge ahead of the government's closely-watched jobs report.

Oil slipped 3% early Friday to $96.85 a barrel. On Thursday, crude sank nearly 9% -- the biggest one-day percentage drop in two years.

Oil, silver prices continue to decline ahead of jobs report - May. 6, 2011

Nice.

If silver drops another 15% and we decide to raise our debt ceiling i'll be dumping another 15% of my cash savings into a few kilos of silver.

There's a bit of a difference between profit taking and a bubble collapse.

BTW, Chrissy, how're housing starts and prices for existing unit doin', you bloody dipschitt?

 

[wimpy77]

Most of it has to do with economic climate. Look for things to become very wacky over the next month with the debt situations.

 

[editec]

Looks to me like Silver's near $50 bubble crashed in May and is now more aligned with the pricing of other commodities.