[JohnDenver]

Dennis Gartman, economist and editor of The Gartman Letter, which is very popular among hedge funds and large institutions, told Bloomberg this morning that Ben Bernanke’s language was not particularly beneficial for the commodities complex.

Commodities will become “much, much weaker” after Federal Reserve Chairman Ben Bernanke signalled support for the U.S. dollar, said Gartman. “We are facing a tidal wave of selling ... and even agriculture prices “may come under pressure following Dr. Bernanke's dollar support.”

http://www.resourceinvestor.com/pebble.asp?relid=43323

[wisconsin_cur]

Oh good... a buying opportunity.

[dunewalker]

I see that crude oil, wholesale gasoline and natural gas are up substantially this morning from late yesterday, and crude is in contango again.

http://www2.barchart.com/mktcom.asp?cod ... n=energies

[Cashmere]

There's been some bozo saying commodities are a bubble since gold hit 500 and oil hit 65.

They'll keep saying it until we run out of oil, and when you can't buy any at any price, they'll say, "see!"

[BigTex]

The bubble was the value of the dollar.

[JohnDenver]

Yup, it's all about this guy:

See that steely look in his eye?
Give yourself a good gut check, because that's the man who's going to rip your speculating lungs out with the stroke of a pen. It's gonna be jes like back in the 70s. Everybody was wallowing in the commodity pigpen, having a gay ol' time until Volcker decided to clean house.

Deja vu

[sameu]

a correction
uhu, and?

[seahorse2]

Anything can certainly happen, and I do think the Federal Reserve is desperate and will get much more desperate. But desperation only makes the problem worse, in fact, any sign of a panicking Federal Reserve will hurt the one thing they are trying to defend, the dollar. In the long run, the only way to help the dollar is not by trying to limit commodities speculation (which I don't think can be accomplished with any law) or even by raising interest rates (which will certainly cause a recession or depression, which they fear). The only way for the US to truly defend the dollar is by eliminating budget deficits for starters (won't happen) and by dealing with entitlement programs which are going to bankrupt the US, as warned by David Walker, former head of the US GAO. Since the US will not eliminate its deficit spending and will not do anything about entitlement programs, the dollar will tank. Ultimately, foreigners will invest somewhere else.

[RonMN]

As far as that silver chart goes (above)...I would say we're at 1977 or '78 right now.

[BigTex]

Yup, it's all about this guy:

See that steely look in his eye?
Give yourself a good gut check, because that's the man who's going to rip your speculating lungs out with the stroke of a pen. It's gonna be jes like back in the 70s. Everybody was wallowing in the commodity pigpen, having a gay ol' time until Volcker decided to clean house.

Deja vu

You know that silver chart is distorted because of the Hunt brothers attempts to corner the market. But I agree with the general point that PMs did experience a bubble during that period, which was pierced by the tight money policies of Volcker's Fed. Happily, cheap oil came to the rescue as well, the excess inventory was sopped up and it was off to the races again.

I assume, though, that you are joking when you suggest that Bernanke would adopt a Volcker-like approach to shoring up the financial system. The system is teetering right now with incredibly low interest rates. What do you think would happen if mortgage rates went to 12-14%? Auto rates higher than that? No more home equity loans for the few who have equity against which to borrow?

If economic growth is premised upon the availability of credit, and the Fed deliberately starts restricting access to credit, how on earth will that do anything except make the current economic situation worse? Not to mention that a strengthening dollar would kill U.S. exporters.

When you've dug a hole this deep, I'm not sure what you're supposed to do to get out of it, but I'm pretty confident that Helicopter Ben is not going to turn into Vacuum Cleaner Ben.

[Twilight]

Some commodities do have bubbles, some have already experienced corrections, and some corrections are to come. But we will see this happen case-by-case on individual merits. A blanket correction is unlikely for now, so long as the US keeps doing what it is doing to the dollar. I did expect such a thing, and then the dollar index dropped towards 70. In dollar terms, you just won't see it if you get a devaluation or unplanned collapse.

[joewp]

Wow, that was some correction.

Up $5+ today, back up over $127.

Keep calling the market JD!

[Jack]

What...remarkable...market timing finesse.

Oil today was $127.75, +5.45.

Perhaps we could start the JD ContraFund. When John provides a sell alert, we all buy...

[TonisD]

S&P managed to "review" and cut AMBAC and MBIA on 24 hours (6 months too late, though). Watch out you people upstairs, oil is coming to get you in a hurry.

[Cashmere]

any sign of a panicking Federal Reserve will hurt the one thing they are trying to defend, the dollar.

Seahorse, I respectfully disagree that the Fed is trying to defend the dollar.

IMO, the Fed has spent the last 40 years trying to keep a bubble economy going, regardless of its affects on the dollar.

[Jack]

Seahorse, Cashmere....

Please permit me to share an idea first presented to me about a year ago.

Each nation has a mythology, which includes things that are so awful they will never permit it to happen again. No matter what the consequences, no matter what the cost.

In the case of Germany, that's inflation. For the U.S., it's the soup lines of the 1929 depression. No matter who the President, no matter who sits in congress, we will inflate to the sky before we choose those soup lines again.

True, not true...I cannot say. But it seems to fit the facts. I think there is little likelihood of an actual defense of the dollar.

[Twilight]

Was that me? I remember saying that in the first housing collapse thread about a year ago. I agree anyway. The countries of the world will run from their personal demons even if it takes them straight off a cliff. I had been expecting more signs of an objective view, but so far have been disappointed.

[truecougarblue]

What the fed says and what the fed does are two very differnet things.

I expect to be back in long by middle of next week. Gold should finish correcting to about 850ish and if it does that is a HUGE bullish indicator to me.

[Jack]

Was that me?

Upon reflection, I believe it was.

A belated thanks for a nuggest of wisdom.

[smallpoxgirl]

For politicians, I think the event never to be repeated in being Jimmy Carter in the 1980 election.