Institutional speculators are taking profits after wildly inflating prices of oil, corn, gold

It’s becoming more and more obvious that institutional speculators inflated the prices of commodities like oil, gold, corn, wheat and other raw materials.

Indeed, it’s so obvious that David Callaway of MarketWatch.com is admitting that speculators not only drove up the prices of oil and gasoline, but they’re also helping deflate those prices.

His lede graphs:

The commodities bubble is dead. Long live the commodities bubble.
In fact, the plunge in prices of oil, gold, corn and other commodities over the past month could easily just be an overdue correction in prices after the impossible gains of the past 12 months. And long term, we can expect that most finite resources—like oil—to gain in prices as we use them up.
But long term, my SUV will be dead, so let’s focus on what’s happened this summer. After several years among the world’s best performing investments, commodities have hit one of their biggest slumps in a generation in the past few weeks.
Oil, which doubled in value over the past 12 months, is down about $30 a barrel from its $147 high, or a bit more than 20%. Gold, which traded above $1,000 an ounce in March, is now below $900. Agricultural commodities, whose price surges this past spring sent starvation warnings across the globe, have now fallen for several weeks running.
Yes, it’s the law of supply and demand. But not the way most of the pundits have argued. Take oil. Nothing’s really changed in supply over the past few months. And China and India - the two bugaboos of the natural resources demand equation—haven’t stopped importing. Yet prices are down 20%?

 

He doesn’t seem to get the fact that the real culprits have been institutional speculators, not the traditional small speculators, but his column, “Supply and demand turned upside down
Commentary: Commodities plunge shows it was hot money all along,” is a step in the right direction.

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