In a major move akin to the past inflationary displays, the price of gold and silver exploded this week as investors, hedgers, and speculators rushed to jump on the precious metals train as prices blew over the highs of last year.
Concerns about political and financial stability dominated the news after the British referendum to exit from the European Union. There has also been growing doubt that near-zero and negative interest rates will solve the problems of massive unfunded government spending. To some, low interest rates and increasing debt loads are like a powder keg that is just waiting for an inflationary spark.
Meanwhile, stockbrokers and Wall Street analysts insist the recent explosion in metals prices is only a flash in the pan and may soon prove to be a dud. Panic buying can result in herd mentality, much like the housing boom of 2008 when careful evaluation of supply and demand fell aside and was replaced with mania.
As of midday Friday, gold futures garnered $1340 per ounce, while silver had soared to $19.50. Even after the recent rally, these prices are still far short of records set in 2011 near $1920 and $50, respectively.
Corn Acres Crush Market
US corn prices fell to the lowest price since early April on news that farmers increased plantings this spring. The USDA projects that US growers planted over 94 million acres of corn, the third-largest crop since World War Two.
Most of the corn crop is in good shape, which means that harvest could be another bin buster, adding to the already-hefty supplies of corn from last year. Adding to the bearish outlook, demand from cattle and hog feeders has been weak in recent months, as livestock prices are making profits hard to come by.
These factors have coalesced to knock December corn futures (the contract representing the post-harvest value) to a mere $3.67 on Friday morning, a price that threatens farm profitability.
Luckily, many farmers were able to take advantage of higher prices near $4.40 just a few weeks ago by hedging on the futures markets and buying put options that act as price insurance against declines like the one that just happened.