Gold, Oil Slump, Leading Commodities Plunge to Four-Month Low

Gold ingots are arranged for a photograph at the Mitsubishi Materials Corp. headquarters in Tokyo, Feb. 22, 2008. Photographer: Tomohiro Ohsumi/Bloomberg News Aug. 15 (Bloomberg) --By Feiwen Rong and Chanyaporn Chanjaroen

Highlights

• "Gold Plunged below $800 an Ounce: heading for the biggest weekly slide in more than 25 years, and oil, wheat and sugar slumped as the dollar's rebound reduced the appeal of commodities after a six-year boom."
• "CRB down 20 percent: from a record July 3, descending into a bear market. Declining raw- materials prices may help ease global inflationary pressures after consumer prices in the U.S. accelerated 5.6 percent during the year to July, the biggest jump in 17 years."
• Michael Pento, a Senior Market Strategist at Delta Global advisor's in Huntington Beach: California.:``There will be a precipitous slowdown in global growth and that means a lot less demand for things like energy and base metals. It would be insane to step in and buy oil or metals now. These markets will be vulnerable for the next four of five months.''
• Peter Luxton, an energy analyst at Informa Global Markets: `It's not just a U.S. problem, it's a global problem, and it's taking its toll on commodities,'' said . ``What's happening elsewhere is starting to take its toll.''

Comments

All that Glitters is not always Gold: I remember the Gold and Silver bubble from 1979 to 1980. There are investors who bought at the top of the market (Spiked up to around 875 an oz.) and as of today still aren't in profit. Be careful with gold, it will always have some value but that doesn't make it a good financial investment. It doesn't earn you interest, commissions on certain types of gold coins can run as high as 30 to 35% and higher, and liquidation of investment size portfolios can be a problem during market stress.

CRB Cash Index: Is an index to watch. (Refer to link on blog) I am looking for a near term support level around the 500 level. We will clearly experience a saw tooth chart pattern decline so I would expect some consolidation of pricing at around these levels for a bit. However, I am bearish on the long term chart and believe this is piece of the World Wide Deflationary puzzle we need to experience to justify my observations.

World Wide Slow Down: I am hearing that nothing can stop the growth of Countries such as China and India because they are; To big, To much momentum, Don't need the USA to continue to grow etc.... As this World Wide Economic Malaise virus spreads, they will be even more vulnerable than the more mature economies. We are all interconnected and don't have the luxury of only experiencing positive economic outcomes.

Jim