Friday, January 05, 2007

Commodities Selloff Spills Over

The commodity complex is getting whacked again today. Gold is breaking down hard, while the dollar is rising.

This mix is likely wreaking havoc on large hedge funds that have been long gold and commodities and short the dollar. There is likely margins calls going on that are spilling over and creating weakness in the broader market.

In situations like these, funds often sell whatever they can to meet the margins calls. And that means stocks.


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