Commodities: Is the boom over? Glencore’s IPO price questioned

6th May 2011

The price of oil tumbled by nearly $10 a barrel today, the Guardian reported, dragging silver, gold copper, lead and tin with it.

The tumble comes as speculation mounts that the commodities boom may be ending.

Traders were reported as questioneing whether the £36bn flotation of commodity trading giant Glencore marked the top of the market.

The price of silver fared the worst, falling 6% to $37.84, its worst week in nearly three decades.

On The Telegraph soft commodities such as cocoa, coffee, sugar were also reported as taking a hit. 

In New York, the benchmark West Texas Intermediate oil future dropped below $100 for the first time since tensions in the Middle East caused the oil price to hit $127 per barrel.

On The Telegraph comment boards ghostofbankwoe agrees that many commodities were undoubtedly a "bubble phenomenon".

"We were told that excess "money printing" by EU, US, UK etc would cause inflationary pressures. This could only account for 20-40% loss of value of a currency, and in the worst foreseeable scenario a loss of 50%. And indeed a quick calculation of global money supply will tell you that's it's nothing like that bad. If silver and gold were a hedge against inflation, they would have gone up by say 40%. In a disaster scenario, maybe 50% drop in value of a currency would imply a doubling ONLY of gold etc. ie 100%.

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