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An investor’s guide to navigating a commodities roller coaster sorry ted already linked article
"Whenever you have the money supply rising rapidly, the commodities in those countries seem to be rising in that currency—and as money supply grows, you’re seeing an economic pickup." (Ms Saefong appears to be trying to summarize Holmes' thinking on the matter. I doubt she understands it any better than I do.)
I agree that many EM's are closely tied to commodities. What's the news there?
I disagree with the implication that this commodities market is easily explainable by some kind of super-trend or money supply figures. As far as I can tell, the rapid plunge in oil (50%) and the GSCI (40%) over the past year are unprecedented. Precious metals sometimes behave this way. But most commodities do not fall that rapidly under all but the most dire financial circumstances.
@hank- Howdy. Ever since I've been a teenager I've been fixing stuff like plumbing and electrical installations, although I've tapered off significantly in recent years. Because of that lifelong experience though, I think that I've got a reasonable feel for the historical retail cost of things like copper plumbing parts, and electrical hardware.
Hank. I have to tell you that with respect to copper plumbing hardware- simple things like 90° elbows, pipe couplings and so forth- nothing fancy, just everyday fittings- the cost per item in the last ten years or so has just been astronomical. Look- if you go to the hardware store, pick up a single pipe fitting, hold it in your hand, look at what it's made of, then look at the price tag, it just screams at you: something is verywrong here.
Sure, China's rapid development is a contributing factor, but I have to wonder what the recent cornering of the distribution market by the commodity divisions of the larger worldwide banks for basic metals like copper and aluminum has contributed. My deep suspicion is that the speculative actions of the banks and other middlemen had simply driven the user cost of these materials to the point of absurdity. Since 2008, the whole thing has collapsed, and I'm thinking that these basic materials are simply trying to find their more natural and normal pricing mechanisms.
The oil and energy side of the commodities is a completely different animal, with huge changes coming from every side, but there may also be a certain element of prices trying to find their more natural levels happening there also.
Comments
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/22590/frank-holmes-an-investor-s-guide-to-navigating-a-commodities-roller-coaster#latest
"Significant probability"?
And this one ...
"Whenever you have the money supply rising rapidly, the commodities in those countries seem to be rising in that currency—and as money supply grows, you’re seeing an economic pickup." (Ms Saefong appears to be trying to summarize Holmes' thinking on the matter. I doubt she understands it any better than I do.)
I agree that many EM's are closely tied to commodities. What's the news there?
I disagree with the implication that this commodities market is easily explainable by some kind of super-trend or money supply figures. As far as I can tell, the rapid plunge in oil (50%) and the GSCI (40%) over the past year are unprecedented. Precious metals sometimes behave this way. But most commodities do not fall that rapidly under all but the most dire financial circumstances.
So, John - Be grateful Ted beat you to this one.
Hank. I have to tell you that with respect to copper plumbing hardware- simple things like 90° elbows, pipe couplings and so forth- nothing fancy, just everyday fittings- the cost per item in the last ten years or so has just been astronomical. Look- if you go to the hardware store, pick up a single pipe fitting, hold it in your hand, look at what it's made of, then look at the price tag, it just screams at you: something is very wrong here.
Sure, China's rapid development is a contributing factor, but I have to wonder what the recent cornering of the distribution market by the commodity divisions of the larger worldwide banks for basic metals like copper and aluminum has contributed. My deep suspicion is that the speculative actions of the banks and other middlemen had simply driven the user cost of these materials to the point of absurdity. Since 2008, the whole thing has collapsed, and I'm thinking that these basic materials are simply trying to find their more natural and normal pricing mechanisms.
The oil and energy side of the commodities is a completely different animal, with huge changes coming from every side, but there may also be a certain element of prices trying to find their more natural levels happening there also.