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'Safe haven' commodity prices fall

Gold and silver

Jeremy Hobson: Stocks continue to drop overseas this morning, but so-called safe haven commodities -- like gold and silver -- that usually rise in uncertain times are falling as well. In fact, many metals are on track for their worst week in months.

To find out what's going on, let's bring in Kevin Kerr. He's president of Kerr Trading International and senior analyst at Moneyandmarkets.com. Good morning.

Kevin Kerr: Good morning.

Hobson: We've had a lot of stock market drops recently, and usually when that happens, many investors go to safe places like gold. But this time, gold is dropping too. What's going on?

Kerr: This is really a parabolic move lower -- we've seen this happen in just a few days. And it's over fears out of a China slowdown and also in the U.S. And the Fed's announcement that they're going to try to do something with this "twist" program. So, it's moved the markets significantly in just a few days.

Hobson: Is inflation less of a concern now than it was just a few days ago?

Kerr: Not at all. Of course, this is a dramatic move in just a few days, and I think it's really a knee-jerk reaction. Inflation is still a specter in the background. The Fed has really solved nothing, and we think they're going to be printing more money, which will drive these commodities and prices right back up.

Hobson: What about other metals -- like tin, which has seen a big drop, and copper, which has also seen a big drop? Why are those things falling in price, and what kind of impact will that have in the real world?

Kerr: These key base metals are typically used in construction and manufacturing, and with the slowing down numbers that are coming out of China, that concerns investors. So they're taking their money out of those markets and besides those base metals markets have been flying high for a very long time, and were overdue for a correction.

Hobson: Kevin Kerr, president of Kerr Trading International and senior analyst at Moneyandmarkets.com. Thanks for talking with us.

Kerr: Thank you.

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