| Search by tag or site | Login to my blog ? Start my own blog |
 |
Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Will Commodity Prices Rebound?
Posted on 10/13/2006 11:36 AM | Link | Post Comment
1. Over the past several months, the commodity markets have feared a worldwide slowdown. We've seen a long string of global interest rate hikes and suffered historic energy prices. It's not surprising that the world economies have slowed and lost momentum. We've seen a massive slide in crude oil prices for the last two months that should have a stimulating affect on the economy, or at least remove some barriers to future growth. Is this the end of the bull market? Not yet, nor should the top come until 2009. This was just an intermmediate high.
2. The U.S. and Japanese economies should begin to improve. This action, along with improving grain prices, may suggest that global economies are not as weak and vulnerable as it has been reported.
3. The current economic situation is not unlike the 1970's when a new word, stagflation, was coined by economists. It refers to economies burdened with higher costs of raw materials and heightened prices of their finished goods. We are in a period where the cost of living is rising as a result of three years of raw material inflation. We will know when equallibrium has passed. It will happen when the PPI (Producer Price Index) has flattened out. Last month, the PPI was nearly flat but only because auto manufacturers were almost giving last year's models away, before the new models hit the showrooms.
4. Gold and other precious metals have been undermined by a couple of things: the decline in world economies as well as the sharp decline in energies, but also, the fear of the central banker selling off gold in Europe under the Washington Agreement which ended September 30th. Fundamentally, gold production appears to be down 8% for the year, whereas global demand has increased another 11%, leaving deficit supplies once again. The hedge funds will not come back in until it goes back over the 200 day moving average.
5. The recent rallies in silver off the mid-September lows have not been stellar, leaving me concerned that the lows may not be set in place. Do not try to hit homeruns in the commodity markets. Right now, share prices for precious metals mining companies are very high.
2. The U.S. and Japanese economies should begin to improve. This action, along with improving grain prices, may suggest that global economies are not as weak and vulnerable as it has been reported.
3. The current economic situation is not unlike the 1970's when a new word, stagflation, was coined by economists. It refers to economies burdened with higher costs of raw materials and heightened prices of their finished goods. We are in a period where the cost of living is rising as a result of three years of raw material inflation. We will know when equallibrium has passed. It will happen when the PPI (Producer Price Index) has flattened out. Last month, the PPI was nearly flat but only because auto manufacturers were almost giving last year's models away, before the new models hit the showrooms.
4. Gold and other precious metals have been undermined by a couple of things: the decline in world economies as well as the sharp decline in energies, but also, the fear of the central banker selling off gold in Europe under the Washington Agreement which ended September 30th. Fundamentally, gold production appears to be down 8% for the year, whereas global demand has increased another 11%, leaving deficit supplies once again. The hedge funds will not come back in until it goes back over the 200 day moving average.
5. The recent rallies in silver off the mid-September lows have not been stellar, leaving me concerned that the lows may not be set in place. Do not try to hit homeruns in the commodity markets. Right now, share prices for precious metals mining companies are very high.
- Canslim.net Morning Comment And Links (for Traders)
- Stocks Fail To Turn Up; Sec's Shorting Ban On Financial Shares Expires
- Nasdaq Technical Picture - Fresh Multi-year Lows
- Your Homes Are Better Than Your Paper
- What Does The Market Meltdown Mean To You?
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- Millionaire Now!
- The 7 Steps to Millionaire Now!
- Build Your Financial Plan
- RETIRE RICH: Survival Guide
- ASSET ALLOCATION MODEL
- THE BIG ROLLOVER IS HERE
- THE END OF THE GRAND SUPERCYCLE?
Examples
ATM Wallstreet - Mon Oct 06, 2008 03:39PM
Made several great trades today. Traded the QID, QQ [read more]
Made several great trades today. Traded the QID, QQ [read more]
ATM Wallstreet - Tue Oct 07, 2008 10:07PM
Today we have the Fed speaking and release of Fed mi [read more]
Today we have the Fed speaking and release of Fed mi [read more]
Morpheus Trading - Tue Oct 07, 2008 08:33AM
NOTE: Please click on the charts below to enlarge them [read more]
NOTE: Please click on the charts below to enlarge them [read more]
<< My Home | TheMoneyBlogs Home