Thursday, May 5, 2011

Commodities Take a Spill

Almost one year to the day of the Flash Crash, commodities took a spill.



The cause? Simple. More sellers than buyers (love that answer). Why? People have been piling in to commodities (a trade you can apply a ton of leverage to) for the past 10 months. As a result, it should be of no surprise that the dollar rallied today as part of the unwind - see more here. For everyone claiming this is a crash, forget about it. Commodities, including silver, are still way up in bubble territory.

Bubble or not, I did dip my toe in and bought a bit of CEF near the close at what turned out to be a 8.5% discount on the theory of an oversold market (hat tip Kid Dynamite).

Source:Bloomberg

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