Where's the Bursting Commodities Bubble?

It seems odd to me that, after having already burst at least two times this year, the commodities bubble would look like this on a chart.

But, then again, I haven't worked on Wall Street for the last twenty years like most of the "commodities bubble" experts, so I must be missing something.

Comments

[JREwing:]

People are just not used to bullish commodity markets, because commodities have been in such a long bear market. Unless something really bad happens in the world, this bull market is gonna last a long time. Two billion people are building infrastructure and existing infrastructure in OECD countries needs replacing.

That's why I can't think of a single reason why commodities should not appreciate in price.

2008 May 09 05:30 AM

[richjoy:]

Commodities of all kinds are in greater demand from a world that is seeing great numbers of "have-nots" become "haves" and "striving-to-have". There will continue to be corrections in commodity prices and related stocks, but the march upward in commodity consumption will most likely continue for a very long time.

What is to stop a growing demand curve?...the only things I can think of are (a) an event (depression, disaster, nuclear war, or deadly illness) so widespread that it there is no immediate recovery or rebuilding; or (b) demand is finally met (meaning most of the world has a living standard similar to ours and that of Europe).

2008 May 09 09:01 AM

[Ker:]

Walstreet just admitted today that commodities are not in a bubble

2008 May 09 09:03 AM

[nlipner:]

I see your point, nice double top but it also looks liks a pennant with a likely breakout in a month...

2008 May 09 10:03 AM

[sorgmot:]

To see more charts and charts with longer histories, click on our site and then click on commodities, and then click on Moore. Most commodities have exploded upward in US dollar terms starting in 2003.

We believe that commodities are in limited supple due to mining limits and world-wide mining cartels. Also, mining costs are up due to fuel and other costs. Since copper has gone up 100 times in US dollars from its 4 cents per pound low in 1932, other commodities can do the same. That would put the CRB higher than it is now.

2008 May 09 01:05 PM

[Bruce Pile:]

Commodity moves differ from stock moves in many ways, but a big difference is that the major moves have 2 to 4 year durations. If you look at the CRB chart going clear back to the 50s and construct a line going through all the big moves (over 20%), you find that at every single change in direction from down to up, the ensuing up move lasted 2 to 4 years - every single one for 40 years! We have just finished a near two year sinking spell from early '06 as we enter '08, so if this historical pattern continues, we are just starting the next 2 to 4 year climb.

2008 May 09 05:29 PM

[Will Rahal:]

Commodities will correct.
I have shown that economic indicators tend to improve at the wrong time, giving investors a sense of false security.
This improvement tend to coincide with peak economic activity.

As the economy sours, commodities will weaken.

2008 May 10 03:44 PM