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Friday, August 15, 2008

"Pop!" said the Commodity Bubble

US dollar strength is smashing up all commodities, from oil and gold down to palm oil and rubber.

Gold, Silver Slump, Leading Commodities Drop on Dollar, Growth: “Gold plunged below $800 an ounce, silver dropped as much as 12 percent and oil, corn and copper slumped as the dollar's rebound reduced the appeal of commodities after a six-year boom.

Palm oil tumbled as much as 9 percent, and rubber and wheat fell as the dollar headed for its longest winning streak in more than two years and on concern a spreading global economic slowdown will reduce demand for raw materials.

Commodities, measured by the Standard & Poor's GSCI index, have tumbled 21 percent from their record July 3, descending into a bear market. Oil traded near its lowest for more than three months, gold for eight months and silver for almost a year. Copper and corn reached six-month lows this week.”

“Pop!” said the bubble (just like all the other bubbles before it).


Anonymous said...

Hey, Sparky.. er Ben... Your scary charts are the reason why commodities shall bounce back and the dollar shall eventually resume it fall from its last gasp rally.

I don;t take issue with the commodities bubble having popped, but that a "commoditized" viewpoint so to speak... we've all heard the popping sound already. Telling us what happens next - now there's a concept.

Do you foresee years of commodities malaise and the dollar index going to 140+ again? or are you content to continue to call the pop in commodities which has already happened.


Anonymous said...

In my Sunday night article entitled 'Investment Strategies for 'Peak Dollar', I write that last week was a parabolic rise in the US Dollar and outside of the Russell 2000, the financial sector, the consumer discretionary, home building a few other consumer sectors, the stock market really wasn't benefited. And I wrote of many technical factors why the Dollar Rally is over.

The USD/JPY tonight is turning down; and this is likely to cause EUR/JPY and the world markets to rise.

With higher commodity currencies, gold is going to rise.

I recommend that one go long SKF and DGP; and I recommend that one go short FXP, and EEV and XHB.

I also recommend that one invest invest in gold at and

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