Commodities Genie Out of the Bottle?

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Crude oil prices tumbled USD 10 a barrel in less than an hour, and from records around USD 147 a barrel just before Bernanke spoke, and are now sniffing USD 120. Gold was trading below USD 900 an ounce on Wednesday, 12% off its records seen in early March this year. Platinum prices have fallen by a full quarter; silver is down 20%, while nickel and zinc prices have very nearly halved over the past 12 months.

The broad global commodities complex took another smashing on Wednesday, driven mainly by a rising dollar, moving on sentiment that competitor currencies could start to weaken as the world's economic cooling gains further traction. The dollar has been in a protracted bear market since early 2002, also marking the point when the so-called commodities supercycle launched itself into a longer term orbit....

During the upcycle, a number of commodity prices have expanded by up to ten times, measured in dollar terms. Supply increases have often lagged demand growth, given the terrible beating that the global resources sector took during the 1990s. And as commodity prices continued to increase, governments the world over indulged in a seemingly never ending increase in taxes....

Crude oil prices tumbled USD 10 a barrel in less than an hour, and from records around USD 147 a barrel just before Bernanke spoke, and are now sniffing USD 120. Gold was trading below USD 900 an ounce on Wednesday, 12% off its records seen in early March this year. Platinum prices have fallen by a full quarter; silver is down 20%, while nickel and zinc prices have very nearly halved over the past 12 months...

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