Led by gold and copper, commodity prices fell to nine month lows last week, thanks to the sell-off on Thursday and Friday across the globe.
As dramatic as the damage to equities, the real losers were commodities, especially the likes of gold, copper, silver and other metals.
With New York oil prices tossed in, all suffered double digit losses in value for the week, particularly from Wednesday afternoon in the US, and especially on Friday.
According to some analysts the fall in commodity prices was due to investors losing faith in the strength of the global economy, especially China.
And while that might have accounted for much of the initial panic, Friday saw speculators liquidating their commodity positions to raise cash.
Sharemarkets in Europe and the US actually steadied Friday night, our time, after another nervous day in Asia earlier on Friday.
So the slump in some commodities prices on Friday night took markets, investors and many analysts by surprise.
But it has to be pointed out the breather in equities on Friday is just that, nothing more significant.
Gold crashed more than $US100 on Friday as the metal that is supposed to be a bulwark in troubled times, went into free fall.
Silver joined its bigger brother and plunged as well, suffering its second steep loss in value since early August.
Gold had its deepest two-day plunge since 1983 and must have hurt some trading books.
Silver fared just as badly with futures posting their worst day since 1987, losing 14%, That must have hurt a lot of investors.
Copper was also sold off heavily and while oil fell, it didn’t suffer the same deep drop as gold, silver and copper.
Talk of a major hedge fund liquidating its gold holdings was one rumour reported as driving gold lower.
But it was more than just one fund: the loss in value of the prime speculative commodities was driven by investors (hedge funds and more stable investors) being forced to raise funds or taking profits and quitting their riskiest investments and heading for the safety of cash or bonds.
It was noticeable that gold, copper and silver in particular fell heavily, despite equities stabilising on Friday in most regions, especially Europe and the US as the mindless sell-off of Thursday dissipated.
The Dow ended up 37.65 points, or 0.35%, at 10,771.48 on Friday, the Standard & Poor’s 500 Index was up 6.87 points, or 0.61% at 1,136.43. The Nasdaq Composite Index was up 27.56 points, or 1.1%, at 2,483.23.
And global stockmarkets as measured by the MSCI All-Country index were up 0.2%, after hitting their lowest level since July 2010 at 274.20.
That made the sharp, 1.6% fall in Australia on Friday, look rather foolish, again.
Bloomberg estimated that more than $US3.4 trillion has been wiped from share market values last week.
The Standard & Poor’s GSCI Index of 24 commodities fell to a nine-month low by the close on Friday.
The index has fallen 21% since touching a 32-month high in April and lost more than 8% last week alone.
Gold has dropped 15% since reaching a record $US1,923.70 an ounce on September 6.
Spot metal fell 5% on Friday night (our time) to $US1,643 an ounce, after trading between a session peak of $US1,754.71 and low of $US1,628.69.
The intra day move of $US126 an ounce was the biggest on record in dollar terms, according to Bloomberg.
Over the week, spot gold fell 9%, its biggest weekly drop since 1980.
Comex December gold lost 6% on Friday, or more than $US101, at $US1,639.80 an ounce.
That was after the 3.7% fall on Thursday.
Gold futures shed 10.1% in value last week which was also the biggest fall in 28 years.
Spot silver was down 14% on Friday, a seven-month low below $US31 an ounce.
That took the fall for the week to more than 25%.
Comex December silver futures closed down nearly $US6.50 at around $US30.10 an ounce, a fall of almost 18% on the day.
Comex December copper futures for December delivery declined 20.85c, or 6%, to $US3.28 a pound
That took the two-day fall to a large 13%, the most since October 2008 when the GFC deepened suddenly.
Nickel and tin also fell sharply.
LME three month copper fell 7% on Friday to around $US7,115.75 a tonne, the lowest price since August 2010, before rebounding to end at $US7,260 a tonne. That was a fall of $US545 a tonne on the day.
LME copper metal lost 16.7% last week.
Copper has lost 28% since its all time high of more than $US 10,000 a tonne in February.
Tin plunged by around 14% to $US17,000 a tonne and nickel by around 11% to $US16,800 a tonne, but aluminium ‘only’ lost 6%.
Nymex WTI crude oil dropped 66c to $US79.85 a barrel, the first settlement below $US80 since August 9.
Nymex futures lost 9.2% in value last week which was most of the 13% fall in value so far this year.
Brent crude in London lost 6% for the week and closed just under $US104 a barrel.
Crude oil and corn had their biggest weekly drops since May.
Coffee prices have tumbled 20% this month, and cocoa is down to a one-year low.
Sugar also fell again in New York and London.
New York raw sugar futures fell 2.7% to 24.13 USc on Friday.
That took the loss for 8.3% for the week and 19% for the month so far.
Markets in Asia will open warily today after the sell-off slowed and then finished in European and US markets, Friday night, our time.
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