Spot gold prices bounced off a $700 low yesterday morning. "Gold's recent slump bewilders investors," headlines MarketWatch.

"An ugly, unmitigated disaster, this," writes Jon Nadler of Golbug Central Kitco.com.

Crashing commodities prices are not just putting hedge fund managers into a jam, they're also putting resource producers at risk. The price surge triggered by the commodities super-cycle had been a boon to large-scale miners in particular. Soaring prices for oil, nickel, copper, and molybdenum made the exploration and development of marginal sources not only feasible but profitable. Across the world, mines (especially silver mines) re-opened that had been abandoned as too expensive a decade and a half ago. (The only fly in the ointment was the falling dollar, which made operating expenses in non-dollar countries relatively more expensive.)

Just take gold: With stocks are as volatile as nitroglycerin, gold should be trading above $2,000 an ounce! But the dollar insurrection has shaken up the commodities markets. Some experts now put gold's downside at $500... even $400. What if they're right? (That's the reason we developed a gold hedge strategy that insures you will make money on your gold position either way. Find his Special Report on the Members Only Reports section of HotStockConfidential.com.)

As Iceland’s banking industry is melting down, the pundits have started to look expectantly at China to put some of their $1.6 trillion dollars into play, taking stakes in distressed Western banks.

After all, Chinese banks appear to have dodged the U.S. subprime mortgage crisis. Barron’s wrote last month:

The worst crash since 2001... 1987... 1937. As the National Debt Meter ran out of digits on Time Square earlier this week, the comparisons of the current crash with earlier catastrophic events are on a sliding scale backward.

On Monday, they may compare Friday's performance to 1929.

U.S. investors are getting inured to the bad news about American financials and insurers. Gold bugs are uneasy as gold posts losses of nearly 30% over its highs. Oil investors wonder how their "$300 oil" could have possibly lost $45 per barrel in eight weeks.

And yet, few people outside of TFN are pointing out that the supposed engine of all global growth, China, has dropped lower and faster than any other losing asset except for Fannie Mae (FNM) and Freddie Mac (FRE) stock. (Alright, throw in Lehman Brothers (LEH).)

And so it begins. The SPDR Gold Trust (GLD), the world's largest gold-backed exchange traded fund, reported that it sold more than 10 tons of bullion this past Tuesday. That corresponds to 1.7 percent of its total holdings.

SPDR now holds "only" 631.2 tons of gold, down from 641.93 tons on Sept. 8. The trust has sold 68.7 tons of gold since its holdings hit a record 705.9 tons two months ago. The current level is still up from the 627 tons reported for December 2007 -- when gold was trading in the $860 range... a solid $100 above today's median price.

Crude oil prices are a hurricane stand-down away from breaking through $100... and gold is about to hit $750! What should you do as the commodities boom crumbles?

These days, I watch my stock portfolio with a sense of pain and excitement. Pain because of the obvious losses even the smartest stock picks seem to be incurring. (Although I prefer to look at this from a Bill Miller kind of perspective: If I'm down 10% and the S&P is down 20%, I'm "beating the S&P by 100%!"...)

Troubled mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) are being placed in a government conservatorship. What does that mean for traders on Monday?

Contrarian investing means going against the trend -- buying low when everyone's selling and selling high when everyone's buying. Today, Monday, September 8, 2008, you will have just such an opportunity to buy low -- with the potential of doubling your money in a few weeks.

Every month, TFN's Financial Roundtable gathers the market's top financial editors to provide perspective on the dominant trends in the world markets. After July's meeting of the minds with Money Morning's Bill Patalon and Martin Hutchinson (Financial Roundtable: Top financial analyst predicts $225 oil and $9 gasoline in 2009), August's event combines the insights of Investors' Daily Edge's gurus Rick Pendergraft and Andrew Gordon.

The day was off to a good start: Crude oil fell as much as 2 percent to $112.75 a barrel. Platinum plummeted $125 to $1,365 an ounce, its gravest intraday loss since Sept. 25, 2001. And gold fell as much as 4.2 percent to $772.98 an ounce.

That’s a loss of $260 per ounce and 26% off the March peak.

"Bad news from the Baku-Tbilisi-Ceyhan pipeline - an installation that may not normally draw much of your attention," writes Martin Vander Weyer in thye U.K.'s Telegraph, "but which is a throbbing artery of global energy supply, carrying vital oil supplies from Central Asia towards a tanker terminal on the Turkish coast. On some remote, sun-baked plain of Anatolia, an explosion sparked a fire earlier this week, temporarily cutting the flow through the pipeline. But guess what? Here's the good news: the oil price did not zoom upwards in response, not a blip, barely a flicker. Actually the price of a barrel of crude has been falling: from a peak of $145 in early July, it came down to $117 and was trading yesterday at $120. That's almost a 20 per cent drop in little more than three weeks."

Was it only a month ago that the rumbling stomach of Mahmoud Ahmadinejad, picked up by an inopportunely placed microphone, would have been interpreted as a viable threat to world oil supplies? Three weeks since the prospects of a rain cloud over the Gulf of Mexico was interpreted as a vital danger to U.S. crude and natural gas -- good for a $5-increase in prices?

Vanguard, one of the world's largest investment management companies and a leading provider of company-sponsored retirement plan services, has reopened its Vanguard Explorer Fund and Vanguard Health Care Fund to new shareholder accounts. Both had been closed in February 2006 and March 2005, respectively.

"We believe that the funds can accommodate additional assets at this time, given their current size and cash flow levels," said Vanguard Chairman and CEO Jack Brennan.

Two of the biggest losers in Wednesday’s trading were Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM). Freddie Mac had reported a second-quarter loss of $821 million. The company stated that the potential of newly imposed federal capital requirements or limits to its portfolio purchases might pose further dangers to its recovery.

Freddie Mac closed at $6.49, down 19.28% for the day, and down an incredible 93% from its 52-week high of $67.20. At this point, however, it has almost doubled from its low of $3.89. The company is reportedly planning to slash its dividend to five cents a share or less for the third quarter — down from the previous payout of 25 cents. FRE is pondering to raise capital by selling a “substantial” amount (at least $5.5 billion) of new capital by selling shares to meet regulatory capital requirements — which most certainly will dilute current shareholder values even further.

I knew it was time for some action when I received an e-mail promotion entitled "Fannie Mae/Freddie Mac bailout to ignite huge wave of inflation sending gold to $2,200" last week. Its author argues:

The government is already 6 trillion dollars in debt, and doesn't have this money. So they either have to borrow or print a colossal amount of new paper money. And that's going to ignite a new wave of inflation that will make the late 1970s and early '80s -- when inflation reached 14% a year -- look like a Sunday school picnic. Gold almost tripled back then and I expect it to at least double with the coming wave of inflation.

Potash Corp. Saskatchewan (NYSE:POT), the aptly named chemicals and potash producer, finished another day in the red, ending the day Tuesday at $173.31 — despite a rip-roaring rally on the American stock exchanges. Between its 52-week high of $241.62 and today’s intra-day low of $161.95, the stock has lost 30% of its valuation.

I said it before and I say it again, that’s not an intuitive price development for a company that saw its Q2 earnings soar 217% and raised its earnings outlook by 30% for the year.

Last week, the Democrats’ Anointed One, Barack Obama, used a town hall meeting in St. Petersburg, Florida, to outline a new $50 billion economic “stimulus” plan. The purchase of his prospective electorate is to be paid for by a “windfall tax” on oil company profits.

Obama said he wants Congress to approve another round of economic stimulus checks of around $1,000 for the average household by fall.

Oil prices fell below $122 a barrel “on expectations that the surge in energy prices is depressing U.S. gasoline demand”. What the oil bulls don’t tell you, of course, is that a bubble asset like oil is most popular when it goes up and produces risk-free gains. An asset that drops $30 in 2 weeks is not risk-free. Hence, it seems less attractive. Investors get cold feet. If they don’t bail… they may well stop putting more money at risk.

We had started to predict a drop in oil prices several weeks ago. In fact, the invitation to join our new premium service Hot Stock Confidential was based on the analysis of money flows, as hedgefunds and industry insiders began to divert large streams of cash into U.S. refinery stocks.

Last Thursday, shares in Russian coal mining and steel company Mechel (MTL) crashed almost 38 percent, after Prime Minister Vladimir Putin complained the company was charging higher domestic prices than they were charging foreign customers.

Yesterday, he picked up where he left off, accusing the company of tax evasion… a charge worth another 26% drop.

Experts still forecast that oil will trade for $150… $175… $200 a barrel by December. Just last week, oilman T. Boone Pickens predicted $300 oil before a Senate panel. And new Russian Prez Alexander Medvedev recently pegged the upside at $500. It’s supply and demand, the argument goes. The new economic superpowers China and India will exponentially increase demand over the next couple of years. So will the assembled Russians and citizens of Arab petrocracies.

Many analysts are discounting the argument that speculative pressure has anything to do with the doubling of crude prices. It’s not the hedge funds and commodities funds and pension funds and institutional investors that are running up prices for oil, gasoline, gold, silver, nickel, indium…. it’s demand, plain and simple.

Wednesday’s biggest loser on the U.S. markets was ADC Telecommunications, Inc. (ADCT), a provider of broadband communications network infrastructure products and related services.