Are Commodities Breaking Down?

From gold to cocoa, prices take a dive.

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Random Roger is wondering if the entire commodities boom has "broken down by the side of the road like an old car driving up a mountain in the summer."

According to Bespoke Investment, the two largest one-day declines in the commodity sector since 1956 both occurred this week. Regardless, the Reuters CRB Commodities Index is still well above its recently surpassed highs from 2006, points out Bespoke. Year to date, the index is up more than 8 percent.

Commodities are caught up in some of the same woes affecting Wall Street, says the New York Times:

The biggest speculators and lenders in the commodities markets are some of the same giant hedge funds, commercial banks and brokerage houses that are caught in the stormy weather of the equity, housing and credit markets. As in those markets, an evaporation of credit could force some large investors—especially hedge funds speculating with lots of borrowed money—to sell off their holdings, creating price swings that could affect a host of marketplace prices and wipe out small investors in just a few moments of trading.