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?
From the Wall Street Journal this Monday:
No doubt commodity traders are having a field day, but what they are speculating on is the Fed's refusal to stop the free-fall of the dollar. The weak dollar has created another speculative bubble, this time in commodities. Oil prices have been surging despite only the usual geopolitical risks to global supplies and despite a recent International Energy Agency estimate that global oil demand will fall as growth slows.
I guess it is about time they put me on the editorial board...