The Real Reason Commodities are Tumbling

I happen to fully believe that ourmarkets are being largely influenced by official acts, both overt and
covert.  My logic is simple; where motive and opportunity co-exist, the
burden of proof shifts to the accused. 

The Central Banks and the Treasury
had a powerful set of motives to shift money away from commodity hedge
funds and into the stricken banking system.  Their opportunity is both
well characterized and self-evident, so I won’t go into that here.

I am not alone in my views:

To hear Donald Coxe tell it, the commodity sell off ripping through Canada’s stock market is no accident. It is the result of a deliberate, brilliantly executed plan hatched at the highest levels of the U.S. Federal Reserve and Treasury.

Mr. Coxe is no paranoid conspiracy theorist. As the chairman and chief strategist of Harris Investment Management in Chicago, he is one of the most respected investment authorities in North America. He also happens to have lost about 10 per cent of his personal wealth in the commodity rout, which came at the worst possible time for his Coxe Commodity Strategy Fund that started trading in June.

“This has done more damage to my personal wealth than anything in the last 20 years,” he said in an interview yesterday. But he has too much respect for how the U.S. authorities engineered the collapse in commodities – a move he said was necessary to shore up the global financial system – to be bitter.

“My attitude is, goddamn it, they’re good … it was brilliant.”

While I understand that the Treasury department feels that circumstances are quite extreme and warrant whatever methods they can conjure up, my core belief is that central planning is ultimately counterproductive and not worth it.

Instead of admitting that our past excesses were foolish and in need of
correction, the natural inclination of the career politician is to "fix
it".  This will only make things worse over time.

For a more complete read of Mr. Coxe’s views, the downloadable document is a transcript a recent investor con-call where he lays out his case.  It is well worth a read.