March 19 (Bloomberg) -- Gold plunged the most since June 2006, leading a decline in commodity prices, on speculation the slump in the dollar will end as the Federal Reserve eases the pace of interest-rate reductions.
The UBS Bloomberg Constant Maturity Commodity Index fell 61.3866, or 4.1 percent, to 1,428.009 at 5 p.m. in New York, led by declines in soybeans, wheat, cocoa and crude oil. The index of 26 commodities has dropped in three of the past four sessions and is down 9.3 percent from a record on Feb. 29.
Thursday, March 20, 2008
Another Asset Bubble?
It is simple supply and demand. In the 90s people poured money wildly into the stock market, and it bubbled and crashed. Earlier this decade the same thing happened to the housing market, and we are now feeling the results. Now the money is being poured into the commodities market, especially oil and gold, and pushing the prices to unsustainable levels. How long before those "re-adjust" too? Perhaps it has already begun?