Commodities & Currencies – October 16, 2008
You will see a little more slide in commodity prices before they start to rebound and go up again. The cost of commodities was very high and it was artificially manipulated. The reports of great growth in some countries fueled the commodity bubble. In addition, the news media had a campaign of fear about the world running out of commodities. Once the economies of the World started to peak, and then slow down, the bubble burst and prices dropped three times faster than they went up. So much of the commodity market is manipulated that you cannot tell the truth from financial fiction. Oil has dropped in half. But, your gasoline hasn’t. The huge amounts of crops diverted to ethanol production was a mistake. The ethanol product that you will see the U.S. importing is sugar-based ethanol. The diversion of staple crops to ethanol production only made the poor nations of the World even poorer. The cost of grains went up and the supply went down.