Weakness in commodities

There was an article in Bloomberg by Pham-Duy Nguyen entitled "Commodities Drop, Rally in Dollar, Stocks Vindicate Bernanke" which chronicles some of the damage incurred by commodities markets this part week, referring to "The biggest commodity collapse in at least five decades" and telling us that:

Investors who had poured money into gold, oil and corn, seeking a hedge against inflation and a weak dollar, sold commodities to raise cash or buy stocks. The Reuters/Jefferies CRB Index of 19 commodities tumbled 8.3 percent this week, the most since at least 1956, after touching a record on Feb. 29.

"Bernanke took care of the commodity bubble," said Ron Goodis, the retail trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. "Commodities are coming back to earth. The stock market looks OK, and Bernanke is starting to look a little better."

And that:

Gold had its biggest weekly loss since August 1990 after reaching a record $1,033.90 an ounce on March 17. Oil plunged almost $10 over three days, after rallying to $111.80 a barrel, the highest ever. Corn dropped more than 9 percent for the week, the most since July.

Now, to be clear, none of this necessarily precludes a rebound and a sprint to even higher price levels, but it might help a little to deter some of "The Stupid Money" from diving in headfirst as if the commodities markets had only one direction.

I would give the commodities markets another month, if not two or three, before making any confident pronouncements about their medium-term trend.

Disclosure: My total commodities holdings consist of 1/10th ounce each of gold and platinum, purchased about 10 years ago. I did own oil via Geodyne limited partnerships, but they have been liquidating over the past year, so I may be completely out of oil by now since the final payment is scheduled for April.

-- Jack Krupansky