The commodities bubble may have burst this month as traders decided to bail out of Silver which was down as much as 25% by mid May. This quasi precious metal ended the month with a collapse of 20%. Some recent financial data indicates that world economies are starting to show signs of an economic slowdown. This led to investor fears that slowing economies means that there will be less demand for industrial materials. The result was a difficult month for commodities, which overall fell by about 5% in May.

Stocks also took a hit in May as the fear of an economic slow down put a damper on earnings expectations and inflation fears. This led to a drop of almost 2% for both stocks, and inflation protected bonds (TIPS). On the other hand, this was good news for both Bonds which were up a little over 1%, and the Dollar which tacked on almost 2% during the month of May. The rising dollar increased the losses experienced by investors in international stocks as those securities fell almost 3%. Interestingly, Real Estate stocks had returns that were more in sync with bonds than stocks as they also gained a slightly more than 1%.

Continue reading the Insightful Investing Newsletter June 2011 …