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

2 comments:

scharfy said...

Just happy to see that crude get blistered.

The Bernank is very happy about this. The proles were lining up with pitchforks.

Welcome back

Jake said...

Headline inflation dropped almost 10% today!

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