Investing Blog

Commodities have been pounded over the last few months. The ride up was attributed to inflation, and now that they’re falling off a cliff there is nothing fundamental to propel such a move. Today the commodities market is rallying a bit on lower oil supplies and the metals are coming back from their lows. If anything, the commodities market should be in a complete bull market run due to their resilience to inflation.

Silver is one of the metals I’ve been watching the longest, when it breaks through, silver will rally into the $100 per ounce mark. There is so much silver being held short right now by institutions, when they have to cover to pare losses, the silver market will rally. Silver dealers around the country are practically out of the metal as it is, the actual hard assets of silver are tiny compared to the amount that is trading virtually. Every year more and more silver is lost in manufacturing to build circuit boards and other machinery that need silver wiring to move electricity more efficiently.

The latest meltdown in the commodities business is likely due to liquidation of assets by big name investment banks that are finding it hard to raise cash and stay in business. The market slowdown as a whole is largely influence by an incredible amount of selling pressure even just from a few major broker-dealers and investment banks.

For now, stay out of the stock market. Cash is king in a market so volatile and prone to fundamental breakouts. When the government comes in to bailout the banks, the whole market listens and responds. Its impossible to know this kind of information before it happens, it’s a tax on the individual investor. Let the market work out its problems and come back when the indices have deflated and buy back at a discount. This market is souring very quickly.

Futures and Commodities, Investing silver