Commodity Bubble Proponent

Burst Bubble? Commodities' Long-Term Story Remains Intact

I'd like to see how much "demand" there really is if buying on the margin was discontinued. Would you really want to pay full face value for a futures contract for 110 oil and 1,000 gold?

To me, most of the arguments for the commodity super cycle are bs. for the following reasons.

1. The Inflation Story: The popular hoards think that since the fed is pumping money into the system, it will lead to inflation. The reality is that the inflation was already built into the system with derivatives that dwarf that real money supply (est. 515 trillion dollars). When looking at the fed liquidity injects, they are miniscule compared to the deflationary impact of these illiquid investment vehicles falling apart. This is why a couple of bad mortgages are destroying the housing industry

2. Oil supply has "peaked" in 2005 and will inexorably decline: Not true according to the EIA. We have had several instances of supply over the "peak" in 2005.

3. Oil/commodity demand will march onwards and upwards unto eternity: Not true again. See declines in OECD consumption. As the US/EU slows down, less demand for cheap Chinese goods, reduced Chinese incomes, and less commodity demand. Total OECD petroleum consumption DOWN over the last 2 years and stagnant since 2004.

4. Emerging markets will grow forever and ever and ever. These markets are most prone to crisis.