Monday, January 23, 2012

What force will pop the commodity bubble?

An increase in the value of the dollar will cause Oil to decrease. A reduction of the mandatory 25% set aside of corn for ethanol will reduce all crop prices.What force will pop the commodity bubble?
a strong, long recession will cause that,



Don't look for that at this time.What force will pop the commodity bubble?
I don't believe there will be a pop in the commodity bubble. I think this might be a semi-permanent situation. You have a country that has 25% of the world's population that is modernizing probably at the fastest pace in modern history. They are absorbing a large portion of the world's resources. Not to mention its neighbor that also has about 20% of the world's population that is just now starting down the same pathway. Are some commodities too pricey? Well, that could be the case, but as long as the demand for a product is there, and there is a finite supply, the price is going to continue to climb.



The only thing that would cause the demand for commodities in the short-term to decrease would be if China enters into some sort of econommic slowdown. They are currently showing some signs of inflation, but not necessarily a slowdown. But, I would just keep my eye on China. Bad news in China equals bad news for commodities.What force will pop the commodity bubble?
In my opinion, it will be the presidential election in November.



But that is just my opinion.
the dollar is declining against all major currencies over the past couple of years.



coupled with the 2.5 billion people in India %26amp; China who are seeing a huge surge in their standard of living, this is putting tremendous stress on the world's resources.



when the US Government stops devaluing the dollar, we will see a halt in the increase in commodity prices. I doubt prices will ever drop substantially from where they are now.



If anything, I fear they will only continue to go up from here.
  • book clubs
  • kayaks
  • No comments:

    Post a Comment