Commodities dive worst in 28 years !!

The CRB Index of 19 commodities fell 10% since June 30, the biggest monthly decline since a 10.5% drop in March 1980, when the US economy was in a recession. Natural gas plunged 32% to lead July's biggest losers. Corn dropped 20% and nickel sank 16%.

Commodities may face ``a very severe correction,'' said Dennis Gartman, an economist at the Gartman Letter in Suffolk, Virginia, who said in June that prices for gold and other commodities may fall. ``The unwillingness of the dollar to hit new lows and the idea of slower demand means it won't be surprising if these markets have further down to go.''

Higher energy costs, reduced access to credit and a continuing pullback in housing have hobbled the US economy and created ``significant downside risks to the outlook for growth,'' Federal Reserve Chairman Ben S. Bernanke said during congressional testimony on July 16 in Washington.

``Some of the momentum has come out of commodities and people seem to be rotating into stocks and financials,'' said Evan Smith, who helps manage $US1.5 billion at US Global Investors Inc. in San Antonio.

Still, investor Jim Rogers, who predicted the start of the commodity rally in 1999, said in a July 14 interview from Singapore that the bull run has a ``long way to go.'' At the time, Rogers, the chairman of Rogers Holdings, advised buying agricultural commodities.

Marc Faber, an investor who publishes the Gloom, Boom & Doom Report and forecast the so-called Black Monday stock- market crash in 1987, said industrial commodities will decline through the rest of the year.

``The world is in recession already,'' Faber said July 23 during an interview from Chicago. ``I put out a negative view for industrial commodities for the second half of 2008 and I stick to this view.''

In China, where record economic expansion spurred a rally for commodities, growth may slow to 10.1% this year and 9.45% in 2009, after the economy expanded 11.9% in 2007, according to the median of 11 estimates in a Bloomberg survey.

Chinese imports of copper and alloys plunged 19% in June from a year earlier. The metal has dropped 14% since reaching a record $US4.2605 a pound in New York on May 5 on concern consumption will fall.

Source: Bloomberg