Reply #11: The speculative commodities bubble burst [View All]

[HamdenRice]

Beginning in 2007, as the subprime crisis first hit and mortgage backed securities became unmarketable, institutional investors and hedge funds began dumping financial assets and buying (speculating in) commodities. That caused a run up in oil futures, gold, platinum and other commodities.

The second phase of the crisis has been a liquidity crisis with all kinds of funds and investors dumping all kinds of assets to raise cash or stash value in the only safe investment -- t bills.

There has been a similar drastic rise and collapse in prices in lots of commodities.

With all this happening at once, we are facing a risk of general deflation, if we're not already there.