Is the commodities boom over?

MRC & Co · 9 August 2008

Re: The commodities boom is over

Nyden said:
The fact that so many have voted no; is enough to reinforce what I already believe; which is yes :

Yes, a definate contrarian play.

But weren't you just talking about agri?

Agree with what Kennas and Wayne have said, a large correction seems to be on the cards, with long-term Chindia growth expected and a resumption of the bull.

So_Cynical · 9 August 2008

Anyone watching the Olympics opening ceremony?

The commentators just said china has over 100 city's of 1 million people
and over 1000 billionaires.

Mr and Mrs average is severely underestimating the China phenomenon.

Wysiwyg · 9 August 2008

So_Cynical said:
Anyone watching the Olympics opening ceremony?

The commentators just said china has over 100 city's of 1 million people
and over 1000 billionaires.

Mr and Mrs average is severely underestimating the China phenomenon.

Over 100 my friend.

Spaghetti · 9 August 2008

I think it will be still very good for a number of years just not sure Australian miners will have it so good. Maybe those that explore offsore will do better as even though prices will remain high seems costs in Australia will increase at a faster pace.

Nyden · 9 August 2008

Re: The commodities boom is over

MRC & Co said:
Yes, a definate contrarian play.

But weren't you just talking about agri?

Agree with what Kennas and Wayne have said, a large correction seems to be on the cards, with long-term Chindia growth expected and a resumption of the bull.

I think as others have stated here; there does seem to be a bit of confusion as to what 'commodities' refers to in this thread.

I'm only talking about base-metals here; people will stop buying cars, they'll stop buying houses; but they'll still need to eat.

Only wish I had already initiated my plan of going long into the USD ... would have already made 4 or so %

I don't think it matters what the Dow does now; if commodities keep up their slide; the ASX is stuffed anyway As I believe that only 2 things have kept commodities afloat recently; 1 is the Olympics. 2 is speculation / hedging against a falling USD, & now that the USD seems to be on its way up, this is obviously going to change.

Some folks are a bit emotive on this subject; which isn't a total shock, really. Most people have a high % of their retirement money on the mining industry, many have their careers / educations based around it as well. If/ when it does collapse ... Australia really is in the mess

CanOz · 9 August 2008

Re: The commodities boom is over

Nyden said:
2 is speculation / hedging against a falling USD, & now that the USD seems to be on its way up, this is obviously going to change.

The USD may rally, but there is not a snowflake's hope in hell its going up for any period of time. This is probably the rally that guys like Jim Rodger's will use to dump the rest of their dollars. The US is in so much debt and cannot raise interest rates, so as interest rate differentials drag on it, so the dollar must slide again. Its only a matter of WHEN not IF.

Cheers,

CanOz

Sean K · 9 August 2008

Re: The commodities boom is over

CanOz said:
This is probably the rally that guys like Jim Rodger's will use to dump the rest of their dollars.

Yep, wouldn't be surprised in his next interview that he's been reducing his holdings, or even got rid of them completely.

Nyden · 9 August 2008

Re: The commodities boom is over

CanOz said:
The USD may rally, but there is not a snowflake's hope in hell its going up for any period of time. This is probably the rally that guys like Jim Rodger's will use to dump the rest of their dollars. The US is in so much debt and cannot raise interest rates, so as interest rate differentials drag on it, so the dollar must slide again. Its only a matter of WHEN not IF.

Cheers,

CanOz

And, you of course believe that you can't be wrong? Jim Rodgers ... long on gold, are you?

The US has been in debt for many, many years - heck, the world has been in debt; for many, many years. If paper-money is as worthless as everyone says; the US can simply argue that, & not pay anything!

What you're saying may very well play out; I personally don't believe it though.

MRC & Co · 9 August 2008

Re: The commodities boom is over

CanOz said:
The USD may rally, but there is not a snowflake's hope in hell its going up for any period of time. This is probably the rally that guys like Jim Rodger's will use to dump the rest of their dollars. The US is in so much debt and cannot raise interest rates, so as interest rate differentials drag on it, so the dollar must slide again. Its only a matter of WHEN not IF.

Cheers,

CanOz

Yep agree.

Jim is a global macro MASTER! One of the very very very few I take heed of. Not sure if he is even a qualified economist, but he sure is one of the best in the business!!

sam76 · 11 August 2008

0043 GMT [Dow Jones] Spot gold mostly holding early gains, last bid $859.20/oz, still up from $855 early Sydney but down $2.00 from morning's high. In technical analysis weekly, National Australia Bank declares "entire commodity boom looks like busting" with further advances for USD likely. "Markets are in for one of the most amazing turnarounds ever seen," NAB says. Gold giving major cyclical sell signals, with monthly close chart showing major break of RSI trend - a precursor to a break of the actual chart, also giving major positive signal for USD. "Gold could well be on its way back to the $630 area," bank says. (RCB)

0043 GMT [Dow Jones] Base metals outlook weak with National Australia Bank declaring today "entire commodity boom looks like busting" with further advances for USD likely. Andrew Silver, deputy head of trading at Natexis Commodities, notes late Friday that unloading of commodities all about stronger USD and poor close last week for base metals "will bring in more selling". In technical analysis weekly, National Australia Bank says LME 3-month copper last $7,400/ton pulling back to support at $7,293, level close to a key weekly close moving average support at $6,936. "A weekly close below that will be very negative for copper with initial downside to $5,260 the first target."(RCB)

wayneL · 11 August 2008

Don't forget all western currencies are screwed though.

Think in relative terms.

explod · 11 August 2008

Funny thread this, talk of commodities and the main discussion seems to be gold. Gold I see as a prescious metal (so commodity to some degree) but for 5 thousand years it has been a currency and store of wealth. This will continue. And the US dollar will get them out of what they owe by sheer devaluation, printing more. The $US bear chart reflects intention in this respect and how some of you are unable to see this fundamental I find hard to understand.

As for metals, they may have a bit of a flop for awhile due to the US going to the wall. But the world will go on, it will have to be greener so in will come nuclear reactors and electric motors to dirve us around. China and India are just not going to stop, (slow down a bit maybe) but the sheer numbers of people who will demand what we have/had will see our metals prices, particularly copper and uranium continue on the merry way.

Cheers, hope I did not spoil your party in this thread,

Explosions to all

jonojpsg · 11 August 2008

I think it was in ASF somewhere I read that China was planning on building 400 new cities (1million+) in the next thirty years

Surely that points to an ongoing strength in commodities markets, I mean think about what that involves, building a whole city the size of Perth or Brisbane!

Add in the zillions of cars they are going to want over the next thirty years as well (that would have to be heading towards 9 figures?).

Then there's India with a comparable population as well who will no doubt be heading down a similar path.

Definitely haven't seen the end of this boom IMO

Gspot · 11 August 2008

jonojpsg said:
I think it was in ASF somewhere I read that China was planning on building 400 new cities (1million+) in the next thirty years

Surely that points to an ongoing strength in commodities markets, I mean think about what that involves, building a whole city the size of Perth or Brisbane!

Add in the zillions of cars they are going to want over the next thirty years as well (that would have to be heading towards 9 figures?).

Then there's India with a comparable population as well who will no doubt be heading down a similar path.

Definitely haven't seen the end of this boom IMO

And don't forget Russia, Brazil, Vietnam and Arabians too, when it comes to building/ repairing infrastructure.
It's amazing how quickly the worm turns?

derty · 11 August 2008

I was at Diggers and Dealers last week and from the talks that I saw, most companies were banking on the continued strength of China to maintain commodity demand. I was of the understanding that Chinese economy relied heavily on the US.

However, I watched a talk from Howard Balloch of the Balloch Group and he was firmly of the opinion that the US only accounted for a small amount of the metals demand in China and that now, due to the development and urbanisation of China, most of that demand is actually internal. So while the sentiment of the US downturn is that China will follow the US into a major slowdown Howard believes that effect will be minor and that commodity demand will be maintained.

(Howard Balloch was Canada's Chinese ambassador from 1996 to 2001 from there he set up the Balloch group http://www.ballochgroup.com/ )

I hope he is right

Here is his presentation:
http://www.ballochgroup.com/uploads...ynote WS [Read-Only] [Compatibility Mode].pdf

CamKawa · 11 August 2008

I can't believe that only 17% believe that it's over.

CanOz · 11 August 2008

Marc Faber doesn't think its over:

http://www.bloomberg.com/news/av/

CanOz

CamKawa · 11 August 2008

Here's a chart of the Continuous Commodity Index, it looks like it's all over to me - bar some shouting in this thread.

explod · 12 August 2008

And just recieved email from Minesite.com headed by the following

"When the going gets tough, the tough get going." It's an old saying, but true enough under current market conditions. Many analysts and company directors have never lived through a bear market and have no idea how to respond. The plain fact is that bear markets last a comparatively short time as investors are natural buyers and the fundamental factors behind the mining sector have not changed. China and India, the two most populous countries in the
world, are undergoing industrial revolutions and it is worth remembering that the British industrial revolution lasted for 65 years.

Revolutions of this type require every type of natural resource and this is why the prices of metals, minerals, oil and gas and soft commodities are rising steadily. Value is therefore being generated throughout the sector as new resources are a priority. The market will wake up to this fact and the companies who have drawn down the blinds in the bear phase will be ignored when things start to recover.

sam76 · 12 August 2008

0021 GMT [Dow Jones] Base metals mostly soften a little yesterday except for lead, which sold heavily again, with LME 3-month price last quoted at $1,925/ton, down 3.3%. Major market participant says stronger USD, other commodities movements drove base metals lower overnight; "the concern for demand from both China and the U.S. continue to dampen sentiment in base metals." Meanwhile, Leonard Kaplan, president of Prospector Asset Management, says investors "are getting out of commodities in general. All of the funds are getting out, and there's a lot left." Among other base metals, LME 3-month copper last down 1.1% at $7,333, aluminum at $2,833, down 0.8%, while tin also down 0.8% to settle at $18,750. But zinc edges $3 higher to settle at $1,690 while nickel edges up $100 to settle at $18,000.(RCB)

So let's say this continues what commodities would remain steady?

My money is on coal - the world's main energy supply. Nothing around that could seriously replace it in the next few years

IO - seems a few still beleive 20%+ increases are possible in 2009 with a filtering off in 2010.

Any others?

Is the commodities boom over?