Silver, Gold Prices Tumble After Rally to Highest Since 1980s

Bloomberg reports:

Silver prices in New York plunged the most since 1983, and gold tumbled from a 25-year high, on speculation that this month's rally in precious metals was overdone.

Silver futures for May delivery fell $1.997, or 14 percent, to $12.525 an ounce on the Comex division of the New York Mercantile Exchange. The percentage drop was the most since February 1983. Gold for June delivery fell $12.90, or 2 percent, to $623.10 an ounce.

Before today, silver had almost doubled in the past year as investment funds poured money into commodities such as oil, sugar and copper. The metal was headed for the best year since the billionaire Hunt brothers caused prices to skyrocket in 1979 by hoarding the metal.

``The gigantic speculative bubble is popping,'' Jeffrey Christian, managing director of New York-based researcher CPM Group, said by telephone from Denver. ``We're at a point where some short-term upside pressure is coming off. But I wouldn't be at all surprised to see prices at a new high a year from now.''

Check out this silver chart.