Commodities Diary: Silver Plummets -27%, Oil Slides -15%, Corn & Copper Retreat

by Tom Taulli | May 9, 2011 10:57 am

Commodities Diary: Silver Plummets -27%, Oil Slides -15%, Corn & Copper Retreat

Here’s a round-up for some of the top stories and price movements in the commodities world for the past week. The biggest news was silver prices, and fear that the precious metal bubble has popped. Gold prices dropped too, but not as drastically. Corn and copper commodity prices also retreated:

Silver: Just in case you were in a cave last week, silver had a big-time correction as the price plunged 27% to $35.29 an ounce.  It was the worst five-day period since March 1980.

The CME (NYSE: CME[1]), which is where silver futures are traded, ramped-up margin requirements, which made it more difficult to speculate.  At the same time, skittish investors dumped huge amounts of shares in the iShares Silver ETF (NYSE: SLV[2]).

Gold: Things were much better in gold, as futures dropped only 5% for the week to $1,491.60.  This was the case even though billionaire investor, George Soros, dumped his holdings of gold (he also sold off his silver).  But another billionaire investor, John Paulson, continues to be a firm believer in the precious metal.  He thinks it will hit $4,000 an ounce within the next five years.

Crude oil: The price dropped by 15%.  In light of the massive market size, this was a stunning move.  Interestingly enough, it could have been the result of program trading and stop-losses that were triggered when oil broke through several support levels.  That is, it looked like investors took their profits en masse.

Corn: This agri commodity was one of the highest-performing commodities last year, surging 88%.  But last week, corn plunged by 7.7%.  True, weather has been tough in the Midwest, which has put pressure on supply.  Yet investors were in a panic-mode last week.

Copper: Copper prices fell below the key $4 level to $3.9635 (for the week, the metal was off nearly 5%).  This was the case even though there was a positive US jobs report.  But investors still have concerns about the global economy.  After all, there is buzz that Greece may leave the euro system.

Tom Taulli’s latest book is “All About Short Selling” and his Twitter account is @ttaulli.  He does not own a position in any of the stocks named here.

Endnotes:
  1. CME: http://studio-5.financialcontent.com/investplace/quote?Symbol=CME
  2. SLV: http://studio-5.financialcontent.com/investplace/quote?Symbol=SLV

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