Steps to Calm Volatility

'"The tremors felt in silver started reverberating throughout the entire commodity patch,” said Richard J. Feltes, vice president of research of R. J. O’Brien, a large commodities broker. Silver ended the week down 27 percent. Crude oil was down 15 percent, and most other commodities also fell significantly.

The futures exchanges have been struggling for months to cope with the challenges posed by rapid price increases and head-snapping volatility in many commodities. . .

The financier Wilbur L. Ross Jr., known for his investments in distressed assets, said that speculation in commodities had obviously gotten a little out of hand. “It’s pretty clear that, for example, $10 to $20 of the price of a barrel of oil was mostly due to speculators and there were probably similar proportions in other commodities,” Mr. Ross said. . .

(T)here was no direct nudging from regulators to raise the silver margins, the CME said.

But regulators will soon have the power to lay down their own rules.'

http://www.nytimes.com/2011/05/09/business/economy/09commodities.html?_r=1&adxnnl=1&src=twrhp&pagewanted=1&adxnnlx=1304895704-+QsVPP7sT8HKOsnVClzWHQ

Why only silver?

It was trading against the bullion bank's shorts.

What a joke.

— and went into free fall. Last Thursday, the rout spread to a wide range of commodities, including coffee, cotton and oil, as investors looked at silver’s plunge, as well as global interest rate trends and other economic news, and concluded that the yearlong boom in commodities prices was ending.

“The tremors felt in silver started reverberating throughout the entire commodity patch,” said Richard J. Feltes, vice president of research of R. J. O’Brien, a large commodities broker. Silver ended the week down 27 percent. Crude oil was down 15 percent, and most other commodities also fell significantly.

Silver prices finally halted their ascent — and went into free fall. Last Thursday, the rout spread to a wide range of commodities, including coffee, cotton and oil, as investors looked at silver’s plunge, as well as global interest rate trends and other economic news, and concluded that the yearlong boom in commodities prices was ending.

“The tremors felt in silver started reverberating throughout the entire commodity patch,” said Richard J. Feltes, vice president of research of R. J. O’Brien, a large commodities broker. Silver ended the week down 27 percent. Crude oil was down 15 percent, and most other commodities also fell significantly.'

which spooked a lot of speculators and caused some unexpected margin calls. If they do it to silver, it could be done for other commodities. A bad ISM number and a bad initial unemployment claims number along with a couple lousy economic numbers from Asia made for a nice little commodities storm last week.

...a statement I read a good convincing piece on a month or so ago, but can't seem to find a link for now. In any case, if you track market volatility for the past 100 years or so against the conditions of income inequality, you find that the more wealth is concentrated in few hands at the top, the more often and the more wildly the markets swing from boom to bust, and boom to bust, and so on.

It kind of like the difference between a pyramid with the mass naturally in the foundation, and a pyramid with a spindly light foundation and a massive point - which of course just wants to collapse or fall over all the time.