Commodities plunge: Is the hard asset bubble over?

Posted August 8, 2008

Commodities have fallen dramatically. Yet each price chart indicates that there’s plenty of value still to be shed just to erase the gains of 2008!

by J. Christoph Amberger

Baltimore — (TFN): Crude oil, corn, cotton, copper, soy beans, silver, platinum. What are commodities falling to four- or even eight-month lows as the U.S. dollar strengthened and the realization dawned that non-U.S. economies have indeed not “de-coupled” from the stalwart engine of global growth.

In fact, the only commodities showing modest gains today were Lean Hogs, Pork Bellies, and Feeder Cattle.

On the currency markets, the greenback chalked up had its biggest one-day increase in almost eight years against the euro. The Canadian dollar fell to 94 cents against the U.S. dollar.

“Everybody is scrambling to get out of the ship before the guy next to them,” the Chicago Tribune quited Nathan Golz, a commodities researcher at Wachovia Securities in St. Louis. “It’s amazing how fast commodities have become the last place people want to have their money.”

Spot gold in particular has lost $140 in three weeks — bad news for those who still (or again) have embraced sweet amnesia when it comes to the period of 1980 and 2001 and again (or still) are claiming that gold is “real money”, a “safe haven against inflation” or other panacea against declines in value.

AP reported: “There’s a money shift going on,” said Jason Ward, an analyst with Northstar Commodity in Minneapolis, who believes grains prices have already seen their peaks for the next few years. “You’re seeing hedge funds move away from the commodities sector and toward the financial sector.”

Interestingly, there a few red, losing listings among today’s bank share closing prices…

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