not to argue with -BARRONS- or -BLOOMBERG- but ... this HEADLINE # of 50 % was only mentioned in passing in the last paragraph of that article in BARRONS ( excerpted from BARRONS ) -commodites in general were fully valued ( fundamentally ) in 9/2007- -Based on the 24-commodityS+P GS index that would mean 30 % collapse from present levels -commodity values could be cut in 1/2 before they stabilize- oh well ... J. Rogers says we are "only in the 4th innig of a 9 inning game" basically they are looking for a "slowdown from China" somehow to do this www.bloomberg.com/apps/news?pid=20601012&sid=ae1ntMGQ1awk&refer=commodities
who decides the intrinsic value of a commodity? My great macro prediction: a short lived correction in the next 6 months, followed by a continued secular bull run.... Whenever oil dips, I just buy up all the small contract drillers with huge back logs...easiest money there is.
Of course commodity prices are too high. However, you have to remember that they are all valued in USD$. As long as they dollar falls the commodity prices could keep going up. It is tough to be a buyer in these markets because they need to correct but...I do not see a stronger dollar emerging anytime soon. I agree with Wu tang...if you can catch a nice correction you should be a buyer in most of these commodity instruments. the dollar is going to stay weak for a while. The fed is going to keep cutting rates and nobody wants our treasuries in the U.S.
All they need to do is reduce liquidity to reduce commodity prices. As soon as nobody has dollars to buy them with, the prices will fall. But as of Friday, all I see is INCREASES in liquidity being sought and granted. Note how I said "sought and granted". Nobody is producing to EARN the dollars, they are just being handed out like they were billions fron heaven. I say that makes dollars worth less.
I think the most commodities indices ever corrected was something like 40% and this was on the goldman sachs index which is not diverse. barrons as usual is dead wrong
Overall commodity prices may decline by half as the value of products such as corn, wheat and copper tend to âovershootâ on speculative buying, citing independent analyst Steven Briese, editor of the Website CommitmentsOfTraders.Org. Thanks to the proliferation of mutual funds and exchange-traded funds tied to commodities indexes, speculative buying has gone way beyond anything the domestic commodities markets have ever seen. Index funds now account for 40% of all bullish bets on commodities. The speculative juices are even more plentiful â nearly 60% of bullish positions â if you count the bets placed by traditional commodity âpools.â If the speculators were to follow the commercial players or âsmart moneyâ â the farmers, the food processors, the energy producers and others who trade the physical commodities â theyâd be heading for the exits. The commercial players are betting on price declines more heavily than ever before. In soybeans, the index funds and commodity pools have effectively purchased 59.1% of the 2007 domestic crop. In wheat, 83.6% of the domestic 2007 crop has effectively been purchased by these speculators. Societe Generale analyst Albert Edwards says that the âcommodity bubble is nonsense on stiltsâ and holds the very strong conviction that before the end of the year, âcommodity prices⦠will be unraveling.â Potential catalysts for a 50% plunge in commodity prices include a slowdown in China, a US dollar rally, an asset allocation switch back to stocks from commodities, less inflation hedging, falling US demand or the CFTC rescinding its exemption on position limits given to index funds.
'nonsense on stilts' lol i can just hear that in a french accent show me the dollar otoh if the cftc (or whatever they're calling it now) were to reinstate position limits as soon as it's convenient again for tptb, that would be crooked