Tuesday, July 29, 2008

Commodities Take a Beating on Stonger U.S. Dollar, Oil Sell-off

Investors are moving out of commodities into equities, as the U.S. dollar continues to climb, and investors sell their positions in crude oil.

Crude dropped by up to $4 a barrel today, causing a drop in gold, silver, copper, soybeans and wheat prices, with corn traded higher, finishing at $6.135 a bushel on the CBOT.

Concerns over skyrocketing commodity prices had many analysts looking for this to happen, as it would eventually have to have a significant impact on demand, which it is increasingly revealing is happening.

Gold investors are wary that the price doesn't drop below the psychological barrier of $900, which could trigger even more sell-offs in the yellow metal, which could cause it to plunge in price. Even the $915 mark could do that. It now stands at $916.50 as of this writing. It dropped as low as $913.10.

The September delivery of light, sweet crude fell $2.54, to finish at $122.19 on the Nymex. That's the lowest since June 10. Since its high of $147.27 on July 11, oil has declined by $25 a barrel.

The migration of money to stocks helped lift the DJIA by 266 points.

Saturday, July 19, 2008

Commodities in Longest Consecutive Drop Since November

With some commodites falling as much as 10 percent, the 5-day slide continues, as the slowing world economy could cut back the demand for a variety of commodities.

Leading the drop in price has been corn, sugar and crude oil. The Reuters-Jefferies CRB Commodity Index plunged by 7.4 percent over the week, ending the longest consecutive decline since the week ending November 30, 2007.

This had to come as the first hald of 2008, commodities rose at the CRB index rose by 29 percent. That's sure to end up lowering demand an numerous commodites like mentioned above, as well as gold, platinum, wheat, rice, gasoline and copper are straining to reach higher.

Demand for gasoline has already started falling some as people stay closer to home in the U.S.

Assuming commodities overall rise more, we're sure to see demand slow down, as consumers and businesses hold back on purchases and acquiring some of them.

``All of these commodities are starting to show signs that the big bull market is over, and the things that people have really made the most money with in the past seven years will start to substantially drop,'' said Michael Aronstein, president of Marketfield Asset Management in New York.
As a result of all this, a number of investors are rearraning their porfolios to reflect the changing realities. A lot of money has left gold and commodites and has been reinvested in equities over the last week.