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Commodity Prices – On A Knife’S Edge

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http://www.investmentpostcards.com/2010/11/23/commodity-prices-%E2%80%93-on-a-knife%E2%80%99s-edge/

The prices of industrial metals find themselves at crucial levels as indicated by the Economist Metals Price Index in U.S. dollar – the latest number is my estimate. The upward trend since the market bottomed in the first quarter of last year is currently being challenged.

http://www.investmentpostcards.com/wp-content/uploads/2010/11/Comm-Pic1.jpg

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http://www.investmentpostcards.com/2010/11/23/commodity-prices-%E2%80%93-on-a-knife%E2%80%99s-edge/

The prices of industrial metals find themselves at crucial levels as indicated by the Economist Metals Price Index in U.S. dollar – the latest number is my estimate. The upward trend since the market bottomed in the first quarter of last year is currently being challenged.

http://www.investmentpostcards.com/wp-content/uploads/2010/11/Comm-Pic1.jpg

What does this mean in English?

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What does this mean in English?

It means the markets still don't know which way things are going to go and the level of nervousness is increasing.

This is likely to go on for years.

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Karl Denninger has been posting a bit on this recently.

He seems to think margins are getting squeezed, retailers hit, consumers will suffer, ultimately a big backlash from consumers about QE2 . Or so i gather.

I guess $4 a gallon gas toppled america once. Dont see why it cant happen again. OTOH Krugman et al dont care if a famine hits america, so maybe not.

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Karl Denninger has been posting a bit on this recently.

He seems to think margins are getting squeezed, retailers hit, consumers will suffer, ultimately a big backlash from consumers about QE2 . Or so i gather.

I guess $4 a gallon gas toppled america once. Dont see why it cant happen again. OTOH Krugman et al dont care if a famine hits america, so maybe not.

Margins also in the metals futures market have increased, as I understand...perhaps this is causing drift in the pattern...

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The CRB index is still well off 2008 highs. I would think the metals have some more legs to go. They aren't all making new highs, or all at eye watering prices. E.g. Nickel

Crb

http://bigcharts.marketwatch.com/charts/big.chart?symb=crb&compidx=aaaaa%3A0&ma=1&maval=200%2C50&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=2392733&style=320&time=10&freq=2&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=4178&mocktick=1

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The CRB index is still well off 2008 highs

And likely* to stay that way in my view.

Hence the reference to the "money where your mouth is" index in the post immediately prior.

(* unless that is some joker works out a way to exhaust a significant slice of the world's nickle stockpiles, like say starting a battle for aerial supremacy in the far East - but really, how likely's that?)

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The CRB index is still well off 2008 highs. I would think the metals have some more legs to go. They aren't all making new highs, or all at eye watering prices. E.g. Nickel

Crb

http://bigcharts.marketwatch.com/charts/big.chart?symb=crb&compidx=aaaaa%3A0&ma=1&maval=200%2C50&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=2392733&style=320&time=10&freq=2&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=4178&mocktick=1

thats because the only commodities having made new highs are gold and silver, they are most likely the fakes rather than every other index on the planet, pretty much every other commodity in existence has simply made a bog standard fib retrace of its impulsive 07/08 move down, the same as the stock markets, the same as the housing market, the same as the CRB index itself

Edited by Tamara De Lempicka

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The attempts to sustain inflation aren't working...?

Got it in one.

The only reason inflation looks high in the UK is because of commodities.

In the US and Europe it is only commodities that are preventing deflation.

As new mines and oilwells are brought on line commodity prices always collapse. The only way to keep commodity prices high is by having the world economy expand faster than miners can build mines. Not possible. China has being buying commodities like crazy for the last two years and has kept the market bouyant. But even their appetite is not unlimited.

Phase two of almost all financial crashes starts when commodities collapse and commodity producers start defaulting on their sovereign debt. Not far away now.

And when it happens, and UK inflation rates drop from 3% to 1.5% overnight, Merv is going to look like a genius.

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As new mines and oilwells are brought on line commodity prices always collapse. The only way to keep commodity prices high is by having the world economy expand faster than miners can build mines. Not possible.

But I guess the question is, will they try (to keep printing)?

^

^

^

[Edit to add: What he said ]

Edited by libspero

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But I guess the question is, will they try (to keep printing)?

It's not if, it is how long will they print for......

Before inadvertantly triggering the hyperinflationary collaspe accidentally by printing too much... but by then its too late and their only solution to hyper inflation is more printing.

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It's not if, it is how long will they print for......

Before inadvertantly triggering the hyperinflationary collaspe accidentally by printing too much... but by then its too late and their only solution to hyper inflation is more printing.

I'm not sure I completely go for the hyper/high inflation situation either though. If total money supply is dependant on the demand and circulation of credit, then if circulation/demand drops I can see how you could print money and still see deflation for as long as demand for credit is low.

The question I find myself asking is, why is there no demand for credit? The only reason is because there is nothing anyone feels is a good investment. Lets face it, if you knew you could borrow at 3% and had an investment that would return you 6%, you'd jump at it... and so would any other investor.

So the problem is we have gorged on cheap debt and ended up inflating asset / investment values above their true worth to society, so now there are no longer any investments worth the risk. What is required is for asset prices to rebalance so they are once again worth the investment.

By printing we are saying, asset values are too high, but rather than let the economy correct, lets keep prices high by giving out free money and forcing (mal)investment in things we have already shown there is no REAL demand for (like creating govt non-jobs).

I'm sure there are some Keynesians who can help me understand why this is better than simply allowing the economy to reorganise/prioritise... but at the moment the answer evades me :unsure:

Edited by libspero

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Guest spp

thats because the only commodities having made new highs are gold and silver, they are most likely the fakes rather than every other index on the planet, pretty much every other commodity in existence has simply made a bog standard fib retrace of its impulsive 07/08 move down, the same as the stock markets, the same as the housing market, the same as the CRB index itself

commodities Money

Now you know why.

One day you will all get it.

Until then...

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I'm not sure I completely go for the hyper/high inflation situation either though. If total money supply is dependant on the demand and circulation of credit, then if circulation/demand drops I can see how you could print money and still see deflation for as long as demand for credit is low.

The question I find myself asking is, why is there no demand for credit? The only reason is because there is nothing anyone feels is a good investment. Lets face it, if you knew you could borrow at 3% and had an investment that would return you 6%, you'd jump at it... and so would any other investor.

So the problem is we have gorged on cheap debt and ended up inflating asset / investment values above their true worth to society, so now there are no longer any investments worth the risk. What is required is for asset prices to rebalance so they are once again worth the investment.

By printing we are saying, asset values are too high, but rather than let the economy correct, lets keep prices high by giving out free money and forcing (mal)investment in things we have already shown there is no REAL demand for (like creating govt non-jobs).

I'm sure there are some Keynesians who can help me understand why this is better than simply allowing the economy to reorganise/prioritise... but at the moment the answer evades me :unsure:

Agree totally........Answer i do not know, its why it is called money printing but is not money printing just shuffling from one side of the ledger to the other side. Money printing, real money printing is by way of tax cuts, tax back cheques and printing real dosh to cover the tax shortfall...............

Edited by Panda

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commodities Money

Now you know why.

One day you will all get it.

Until then...

Gold bug alert sound all sirens alert the warden the bugs are here....................................Will you ever see your paper sorry cash you paid for you paper sorry gold?

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Gold bug alert sound all sirens alert the warden the bugs are here....................................Will you ever see your paper sorry cash you paid for you paper sorry gold?

Very immature.

Are you angry with the 'bugs' for buying at a much lower paper price, or yourself for not understanding the the problems with the monetary system?

A lower paper price for Gold/Silver would be great now...so keep talking.

They failed to get Silver under $25 today...ouch!

This 'bug' will leave you alone now. Enjoy the circus.

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And likely* to stay that way in my view.

Hence the reference to the "money where your mouth is" index in the post immediately prior.

(* unless that is some joker works out a way to exhaust a significant slice of the world's nickle stockpiles, like say starting a battle for aerial supremacy in the far East - but really, how likely's that?)

I wonder how the BDI would reflect trade tarrifs and changes in trade flows.

Would it also reflect a loss of confidence in a currency.

So if people are buying commodities for different reasons and outcomes than prior to 08 then maybe BDI is now a dud.

Edited by gravity always wins

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I'm not sure I completely go for the hyper/high inflation situation either though. If total money supply is dependant on the demand and circulation of credit, then if circulation/demand drops I can see how you could print money and still see deflation for as long as demand for credit is low.

The question I find myself asking is, why is there no demand for credit? The only reason is because there is nothing anyone feels is a good investment. Lets face it, if you knew you could borrow at 3% and had an investment that would return you 6%, you'd jump at it... and so would any other investor.

So the problem is we have gorged on cheap debt and ended up inflating asset / investment values above their true worth to society, so now there are no longer any investments worth the risk. What is required is for asset prices to rebalance so they are once again worth the investment.

By printing we are saying, asset values are too high, but rather than let the economy correct, lets keep prices high by giving out free money and forcing (mal)investment in things we have already shown there is no REAL demand for (like creating govt non-jobs).

I'm sure there are some Keynesians who can help me understand why this is better than simply allowing the economy to reorganise/prioritise... but at the moment the answer evades me :unsure:

Good post!

It reminds me why I joined this site and continue to visit.

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This is all unfolding almost exactly like the financial collapse of 1857. It was extensively documented in a book on the subject published in London 1859. It unfolded like this:

Huge financial fraud: property collapse, share collapse: 1857.

Commodities boom, share recovery.

Share market collapse: 1859.

Commodity collapse: 1859.

In America: Civil War 1860.

Edited by Toto deVeer

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This is all unfolding almost exactly like the financial collapse of 1857. It was extensively documented in a book on the subject published in London 1859. It unfolded like this:

Huge financial fraud: property collapse, share collapse: 1857.

Commodities boom, share recovery.

Share market collapse: 1859.

Commodity collapse: 1859.

In America: Civil War 1860.

Was this just an american financial collapse, or worldwide, with multiple coutries collapsing?

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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