No silver lining.(Reprint)

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Over the past year the price of silver has enjoyed a meteoric rise. In May 2010 you could have purchased an ounce of silver for just $13. Twelve months on it had risen to about $50 an ounce, doubling in price over the previous six months alone.

But last week provided yet another warning, as if one were needed, of the fate that awaits financial assets that rise too much, too soon.

Think about the price of internet stocks in the year 2000 or UAE property prices in 2007. Yes, we're talking about the popping of speculative bubbles. And it was the turn of silver to pop last week with the price falling by an eye-watering 27 per cent.

That's the biggest one-week loss since 1975, enough to wipe out the gains of the previous two months in just five trading sessions. And the fall in silver spilled over into other commodity markets.

The Standard & Poor's GSCI Index of 24 commodities finished the week down by 11 per cent. All in all, it wasn't a good week for commodities.

But as you might expect, following these declines many analysts are now predicting a recovery in commodity prices. Others, however, are viewing the silver crash as a warning, a canary down the coalmine, so to speak. They believe the fall in silver foreshadows something more worrying: the end of the commodity bull market.

This article was originally published by www.7days.ae.

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