Commodities Perspective

For those of you with some miles under your belt, you might remember a company called "Commodity Perspectives" owned by Knight-Ridder and then by Bridge Information Systems via acquisition of Knight-Ridder Financial. Ah, the good old days when the CRB index was actually owned and operated by the CRB (Commodities Research Bureau) and both the CRB and CP nicely complemented the financial information of the rest of Bridge.

But I digress. The whole Bridge world collapsed under foolish expansion (mostly buying Telerate) and we lowly employees are in diaspora.

Let's put some perspective on commodities. Yeah, we know speculators in the thin silver market got spooked by margin requirements. We also knew it was wildly out of whack. Then came the crash of the first week of May.

Crash? Really? 1929 was a crash. 1987 was a crash. 2008 was a crash.  Does anyone recall 2001 being labeled as a crash? Even the days surrounding the 9/11 attacks?

So why was a 14.7% drop in crude oil a crash? I'll give you the 30% drop in silver but don't crashes usually come as a surprise? Did anyone really think a selloff was not pending?

Check out this chart of the old CRB index - the good one with a nice representation of commodites (vs. the bastardized spawn with heavy energy weightings to reflect the economy - wait a minute, that's not core! but I digress again).

Why was last week called a crash but the exact same move in March was name-less? Was everyone distracted by Japan?

Let's put this argument to bed right now - no crash in commodities. Silver maybe but not "commodities" and the implication is that the world is the same as it was before last week. Commodities as an asset class are Jim Rogers' fave and I concur.