Wednesday, March 12, 2008

Memories of bubbles past Don Vialoux, Financial Post

"An investment bubble currently is evolving in world commodities.
Commodity prices exhibit all the classic signs:

The CRB Index, a measure of a basket of major world commodities, started to go parabolic last August. In January it broke to a record high. Since August, the index has advanced more than 40%

The prices of gold, copper, silver, crude oil, heating oil, unleaded gasoline, wheat, corn and soybeans currently are trading either at multiyear highs or at record highs.

Fundamental prospects for many of these commodities do not justify current prices. For example, crude oil and unleaded gasoline prices are reaching record highs despite abnormally high inventory levels.

Much of the recent buying is believed to involve hedge fund managers, a group that is notorious for changing its investment positions at the drop of a hat."

(Full article: click link in title)

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