Ever since GLD, USO, MOO, PBW, PHO, etc. have come on the market, I have noticed an increase in the prices of underlying commodities. Chicago Futures were the original market to play the commodities game, and because of the complexity of getting into the market the average investor didn't bother.
Getting into an ETF is as simple as point and click. It's easier than going to a coin dealer and buying gold. It's easier than trading futures on an exchange, even though some of the products do just that for you.
It is a proxy for speculation, and speculation can be quite different from reality.
So other than Ethanol artificially inflating prices, ETFs and commodity index funds appear to be doing the same.
The "culprit" is the new breed of commodity index funds. Each week over the last two months, between $5bn and $10bn of fresh money has been pouring into the Goldman Sachs Commodity Index, the Dow Jones-AIG Commodity Index, and other funds, according to a UBS study. Together, the indexes now hold $200bn.
Let's just hope they get the double-short ETFs out fast enough to get the price of bread back down to a normal level.
The price of gold plummeted today. Perhaps $975 rounded is $900? Since you can't cut a bar of gold in half without losing some of its value, maybe this is the case.