So, the speculators run out of gold, oil and natural gas. Prices of all three are down significantly in the last weeks. I just heard Larry Kudlow on CNBC say that this means inflation is over. I'd like to propose the contrary argument. I think he is being America-centric in his analysis of assets that are prices globally.
The following things have not changed yet:
1. India and China continue to have high economic growth rates. They continue to industrialize and will continue to increase their use of resources.
2. The price of gold is full of speculation and thus is expected to have pullbacks.
3. The US Dollar recovering some value has much to do with the dollar price of these commodities falling.
My prediction: Commodities will continue to fall as speculators using futures will continue to sell and maybe even go short. One day, the media/market will wake up and realize that the emerging economy growth story is not over. We may see a decline due to energy for September but global pressures on commodity prices continue.
Disclaimer: nothing in this web log is meant to be a recommendation to buy or sell.