Commodities speculation R.I.P.

A Bloomberg article by Shruti Singh entitled "Commodities R.I.P. as Leverage Vanishes, Growth Slows (Update1)" is a great summary of how commodities prices are now starting to come back down to earth as "investors" pull money out of commodities in a fairly dramatic manner. I always knew that the big run-up in commodities was far more than supply and demand and that speculators were the main culprits, but this article provides some detail on how excessive that speculation really was. The main thrust of the article is that a large portion of the speculation was based on dramatic financial leverage based on easy credit which is no longer so easy.

The concept of commodities as an "investment class" was always a clear case of fraud. People should go to jail for touting commodities as an "investment." The SEC should ban the touting of commodities as an "investment." Pension funds should be banned from "investment" based on speculation in commodities. Finally, the Federal Reserve should ban banks from engaging in commodities "investment" or at least require that commodities holdings may not be treated as capital.

-- Jack Krupansky