Will Rahal

Commodity Bubbles and Valuation: Imperfect Together

Run ups in commodities is not something new.
As a part of a complicated puzzle, you have to determine where it fits into your investment pieces..
Sometimes the spike in commodity prices denote the peak of economic activity.
I have posted on Crude Materials a PPI component.
Ratios and acceleration are at extremes, suggesting a correction in commodities is in the works.

Where's the Bursting Commodities Bubble?

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.

Commodities and the Fed: Answering the Skeptics

Surging Economies such as India and China are generating an unprecedented demand for commodities as workers get richer.
Just picture, say, 300 million people dropping their bikes and picking up a motorcycle or small car. If they use 2-3 gallons gasoline/week ... you get the picture
I have charted ratios between Crude, Intermediate & Finished Goods.
These ratios are at extreme, pointing to an imminent correction in commodities.

Fed Easing: No Free Lunch for Dollar, Oil and Commodities

We import 10 million barrels of oil a day. This means $1 Billion a day at $100/barrel.
When the price of oil declines net imports will decline also recursively making the US Dollar stronger.