arawak

Why I Don't Own Commodities

Dan,
Once again you pass judgment on commodities based on "price levels." Sure, there is some element of fad investing in commodities right now but this is not like the "tech and telecom names of the late 90s." Those were entirely artificial bubbles based on wild speculation and collective insanity. Put away the chart for a second and look outside. There's not enough oil in the world to meet demand (hence willingness to find oil in 6,000 feet of water)!

The U.S. Energy Information Administration showed in 2008 a production peak in May 2005. Please explain away how oil is going to become cheaper given this fact?

On the food side, the hungry masses of India and China want more meat -- and now they can start to afford it! The world's population continues to swell but arable land is on the decline! See: www.tranquileye.com/cl.../

For the last couple decades the market has been a playpen for ideas to go boom and bust in, hence the temptation to consider this current boom to be a bust waiting to happen. Commodities prices, however, are much more closely tied to "real world" events and the real world is starting to look mighty crowded.

Couple all of the above with the inflationary pressure of a declining dollar (thanks to the US being an enormously irresponsible debtor nation) and the commodity boom is looking just fine.