A fire sale in gold

July 26, 2015

San Francisco (July 26)  Commodities prices are tumbling, and gold was leading the way down this past week. Prices fell to a five-year low, with August gold futures worth a mere $1,080 per ounce Friday.

Prices are falling as investors dump the metal in favor of stocks, bonds or cash, which they see as a better short-term investment. Gold is losing its luster as the Greek crisis has quieted and the U.S. economy is looking increasingly strong; on Thursday, the U.S. government reported the lowest weekly jobless claims in over 40 years.

Longer term, there are increasing expectations that the Federal Reserve will begin raising interest rates this year after eight years of falling or flat rates, which has been dampening investment interest in gold. Many would-be gold buyers seek the metal as protection against inflation, but higher interest rates could prevent prices from rising. Alongside gold's collapse, other metals like silver, copper and platinum fell hard, creating a bonanza for bargain-hunters.

Eggs crack new highs

Egg prices are soaring to new high values after an outbreak of H5N2 avian influenza killed more than 35 million egg-laying hens this year. A dozen eggs now costs nearly $2.50, a sharp jump of nearly 50 percent this year.

The disease, which is not expected to affect the human population, also has killed more than 10 million turkeys and chickens raised for meat. Overall, it has predominantly struck egg-laying hens, causing the price of eggs to explode in comparison to chicken. For the first time in recent history, chicken now is a cheaper source of protein than eggs, which may force restaurants to consider menu changes.

Summer weather reduces the virus' ability to spread, but immunologists warn that the disease could cause a flurry again this fall once temperature drop, potentially leading to a worse crisis and more expensive breakfast options.

For U.S. grain farmers, shrinking poultry flocks could hurt demand for corn and soybeans, putting pressure on prices.

— Walt and Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, Kansas. This is not a solicitation of any order to buy or sell any market.

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