Those charts tell another story. Look at how closely the grains correlate to the behaviour of the metals. Analysts have suggested that the metals are lower due to slowdown in demand as a result of recessionary forces. Now for sure there is going to be reduced demand as new home construction plummets or auto manufacturing dives. Most manufacturers use a just-in-time delivery inventory management, which means that parts are stamped and delivered as needed and very limited supplies of metal would be stored. This means that the metals consumption is a real-time indicator of how things stand. Futures contracts guess what the situation will be months down the road.
The big question therefore is why have food commodities dropped so sharply. Have people stopped eating? Are there fewer mouths to feed on the planet this month than in July? Of course not! And that is the fact to keep in mind going forward. One should surmise that the declining charts for all commodities is a measure of money flow and not real demand for each commodity. Deleveraging was a factor for several months, but now I would presume that momentum traders and spec shorts are a big part of the total trading.
When the talking heads refer to the drop in oil and state that demand has collapsed, I am very suspicious of their claims. It would be more accurate to state that traders have gone overly bearish on the short term on the PERCEPTION of weaker demand.
So too with gold and silver. The charts have indicated a glut of metals, weaker demand, etc. We know from the brisk sales of all bullion worldwide that the demand is about as strong as any other time in history. Charts lie...
cheers!
mike