Roubini Speaks: Another Asset Class Falls

On Thursday, Shelley Goldberg, the commodities strategist at Roubini Global Economics, recommended that investors take some profits on their positions.  There was fear that the recent price increases were overdone.  She was predicting a retrenchment before commodities will resume their upward trajectory.  The Reuters-Jefferies CRB Index, one of the commodity indices, fell 5% on that day.  Oil, natural gas, silver, copper, tin, cocoa and coffee cratered.

The reasons for the fall in prices were varied:

• Weak US economy
• May seasonal selling of commodities
• Eurozone debt troubles
• Monetary tightening, slowing growth and inflation in emerging markets
• Trend following algorithmic traders
• More assets invested in commodity ETFs
• Unwinding of arbitrage trades
• Profit taking

There is more information in this article.