RE: Buying Opp or Epic Turning Point?We've been in a world where there's more risk, more risk, more risk,"
Oil's selloff began in London, and accelerated as New York traders piled in.
Before noon New York time, Brent crude oil prices were already trading down a jaw-dropping $8 a barrel.
In the space of just hours, the drop in the price of crude oil had shaved nearly $1 billion off the cost of supplying the world's daily oil needs.
That could be good news for gasoline consumers. But Eric Holder, the U.S. Attorney General who has recently formed a government working group to investigate manipulation in oil markets, had a blunt warning for oil traders. He wants proof the savings are being passed on to end users.
Early Thursday, investment advisory firm Roubini Global Economics had also joined the fray, telling clients for the first time in years to cut commodities in their macro portfolios.
"Since prices have been advancing well beyond any reasonable measure of value
funds like Soros and others, which had been aggressively overweight commodities, were cutting the portion of their portfolio allocated to commodities.
Because those positions had grown so large, even a small rebalancing would amount to billions and billions of dollars in contracts sold.
After weeks of thin trading in Brent oil futures, Thursday's trade volume hit a record.
As crude crashed on Thursday, it dragged down every other major commodity. The Reuters Jefferies CRB index, which follows 19 major commodities, was on its way to a 9 percent weekly drop, the biggest since 2008.
Silver is a tiny market, much more susceptible to sharp price moves.
That's why wannabe HUNT BROTHERS- Sprott wants to corner it.
Some traders suspect that big holders were cashing out of the least liquid commodity market first, before moving onto the big one - oil.
BIG NAMES TURNED BEARISH
Soros was busy selling commodities positions again on Thursday.
He had said for months that gold was pricey.
Even online advisors to mom-and-pop investors such as The ETF Strategist had warned of a bubble in precious metals that could be ready to pop.
Oil's descent followed the biggest one-day price drop in silver since 1980 on Wednesday
The rare moves of $10 a barrel usually are set off by dramatic events -- the outbreak of the first Gulf War in 1991, or the collapse in 2008 of Lehman Bros bank, which both led to recessions.
Never before had crude oil plummeted so deeply during the course of a day.
At one point, prices were off by nearly $13 a barrel, .
When oil prices fell below $120 a barrel in early New York trade last Thursday, a few big companies that are major oil consumers started buying around $117.
It looked like a bargain. Brent crude had been trading above $120 for a month. But the buying proved ill-timed. Crude kept on falling.
"They were down millions by the end of the day, trying to catch a falling piano," an executive at a major New York investment bank said.
Some of the seeds for the rout were sown earlier.
In April. Goldman Sachs' bullish team of commodities analysts, led by Jeff Currie in London, issued two notes to clients in rapid succession recommending they pare back positions. In one, the bank called for a nearly $20 dollar near-term correction
A routine report on U.S. weekly claims for unemployment benefits spooked investors, showing the labor market in worse shape than expected.
That fed a growing pessimism about the resilience of the global economy after industrial orders slumped in Germany and the massive U.S. and European service sectors slowed.
Then the European Central Bank surprised with a more dovish statement on interest rates than expected, signaling its wariness about the euro zone outlook.
The dollar rose sharply
Machines, following the market trend, may have gone further, by dumping long positions and quickly amassing sizable short positions instead
The negative factors -- prominent cheerleaders turning bearish, some weak economic data, cheap money from the U.S. Federal Reserve ending by July,