hugho

Commodity Analysts Believe the Party's Over

Wow people. What do you really think?!!!I think the key to understanding the commodities is understanding the underlayment to commodities and that is the energy used to extract them and the financing behind the extraction.If the cost of the energy goes up, the commodity goes up and/or becomes scarce. The outlier factors influencing price are many and varied and of course include obvious things like analysts recommendations fatuous and otherwise, futures markets, sociopolitical events, investors expectations, etc blah blah. Most commoditites are oil driven, some coal or gas(electricity). If commodities are abundant and energy is cheap it stands to reason that there is price elasticity influenced by supply/demand factors. If lots of land can be planted to expand the crop base, elasticity. That is not the case, people. Something is different now and until it becomes common knowledge that the cost of energy is what drives these things, Oil(energy) will fluctuate in price but oil will never go down for any sustained period ever again.The truly essential commodities probably wont either and I wouldn't begin to guess on the specific ones like rare metals. If we enter a period of deep or sustained industrial downturn some will drop. We wont need as much platinum or palladium when basket case corporations like GM stop building 6000 lb suburbans and pickemup trucks that need big catalytic converters. But it's hard to bet against grains; we'll never see $2/bushel wheat again. People who watch the bubbleheaded bobbleheads on CNBC and Fox etc are wasting their time.