The Ignorant Investor

LONDON (Reuters) - Prices of industrial metals were battered by a fresh round of investment fund sales on Friday, increasing jitters in markets that were still reeling from aggressive selling earlier this week.

[On the London Metal Exchange (LME), copper down 3.5 percent. Aluminum down 4.5%. Lead down 7%. Nickel down 6%]

"It is the end of the week and there is a lot of nervousness around. The general outlook is still good, but these markets needed a shake-out," an investment fund source said. Analysts said confidence in a stunning two-year commodity bull market had been rocked by a broad mid-week sell-off that started in mid-week, and sentiment was still nervous.

These kind of drops happen even in fantastic bull market. I'm not in the commodities thang right now(Indeed, I've only just heard of it, a full two years after it began--am I on top the situation, or what?), but the long-range outlook for commodities hasn't changed.

Provided you buy the story on commodities pushed by guys like Jim Rogers- i.e., demand outstrips supply for the next decade because production capacity was gutted by the last commodity bear market and can't be rebuilt for years, leading to a huge runup in prices- the recent price drops aren't discouraging. Rogers would say these metals are only going to keep trending upward, even if the moves are going to be volatile.

Do I believe that? Man, I don't know. I guess I do. But then, I've been suckered before.