blackbody

Commodities: Bubble or Not?

Just look at USO for example. If an investor buys into USO, then that creates demand for crude oil. Same is true for UNG, UGA, DBV, etc etc. The commodity have turned into investment vehicle where even average retail investors can speculate on commodities. As more and more people choose to hold position in USO or GLD, the added demand created will further skew the supply/demand. But just as added speculation added to the demand, the other side of the same coin is surge in supply as the speculative funds leave the commodity market at some point on profit taking. Each day, as commodity hits record after record, the defenders of price are beginning to sound exactly like the real-estate defenders of few years ago; this time it's different, that this is for real and price will never come down. I give it 12 month for commodity market to become another burst bubble.