Commodities tide turned?

meester

Protests across Europe at
http://news.bbc.co.uk/1/hi/world/europe/7426971.stm

Prices have been tripled in three years in Indonesia as the government tries to roll back the subsidies which consume 10% of its budget. Obviously resulting in reduced demand (e.g., in Indonesia, the increased price of kerosene results in people switching to LPG for cooking). Other countries such as Egypt also reducing subsidies.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/29/ccoil229.xml

Economic conditions in the West the worst in many generations.

Could this be the beginning of a massive retreat (and of course, expect gold and other metals to follow suit)?

Have all the amateur investors jumped on to the top of a bursting bubble, yet again?

purch

Have all the amateur investors jumped on to the top of a bursting bubble, yet again?

Probably not....but it could easily be a smaller bubble about to burst within the larger longer term bubble that still has a long way to run.

The Oil market is going into 'Contagion' as the Spot price moves below the Futures, and could be the signal for a dramatic short term reversal, which will affect all Commodity markets, some more than it should.

In fact a reversal in the Oil market will no doubt trigger bigger reversals in other commodity markets, which will overide fundamentals and leave many scratching their heads and wondering why.

As is often the case, a major move in one market results in an even bigger move in a totally unrelated market....:eek:

Such is the nebulous world of trading :cool:

dunker1

meester wrote: »

Protests across Europe at
http://news.bbc.co.uk/1/hi/world/europe/7426971.stm

Prices have been tripled in three years in Indonesia as the government tries to roll back the subsidies which consume 10% of its budget. Obviously resulting in reduced demand (e.g., in Indonesia, the increased price of kerosene results in people switching to LPG for cooking). Other countries such as Egypt also reducing subsidies.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/29/ccoil229.xml

Economic conditions in the West the worst in many generations.

Could this be the beginning of a massive retreat (and of course, expect gold and other metals to follow suit)?

Have all the amateur investors jumped on to the top of a bursting bubble, yet again?

Its certainly looking that way, seems that the commodity bulls just shout a little louder than everyone else, which attracts a following.

Browntrout_2

I have bought an ETF with the ticker SOIL.

Short OIL - ETFS Short Crude Oil (SOIL) is designed to change each day by minus one times (-1x) the daily percentage change in the DJ-AIG Crude Oil Sub-IndexSM (before fees and adjustments). Therefore if the DJ-AIG Crude Oil Sub-IndexSM falls (or rises) by 1% in one day, then ETFS Short Crude Oil will rise (or fall) by 1%. In addition, an interest component is added each day to give a total return investment.

meester

Browntrout wrote: »

I have bought an ETF with the ticker SOIL.

Short OIL - ETFS Short Crude Oil (SOIL) is designed to change each day by minus one times (-1x) the daily percentage change in the DJ-AIG Crude Oil Sub-IndexSM (before fees and adjustments). Therefore if the DJ-AIG Crude Oil Sub-IndexSM falls (or rises) by 1% in one day, then ETFS Short Crude Oil will rise (or fall) by 1%. In addition, an interest component is added each day to give a total return investment.

Yeah, commodities look very risky right now.

"In the near-term, however, one should be prepared for the possibility of a dramatic pullback. With magazine covers like the Economist featuring a picture of a stamped barrel ($135), and with CNBC putting a special ticker of crude in the lower-hand corner of its screen for 24/7 viewing, one is reminded of Nasdaq coverage in 1999."

"truth, if the dollar strengthens, it could mean trouble for "commodities-can-only-go-up" investors. Time to take off the blinders."

Oil could easily fall back 50%

Milarky

purch wrote:

The Oil market is going into 'Contagion' as the Spot price moves below the Futures, and could be the signal for a dramatic short term reversal, which will affect all Commodity markets, some more than it should.

Isn't that a 'Contango' rather than a 'Contagion'? What's the adjective for 'Contango' - 'Contangion'?

JDinho

Milarky wrote: »

Isn't that a 'Contango' rather than a 'Contagion'? What's the adjective for 'Contango' - 'Contangion'?

I think one would say 'the market is in contango'. Although my gramma isn't the best I await correction. Contango = negative roll yield for ETC investors!

purch

Isn't that a 'Contango' rather than a 'Contagion'? What's the adjective for 'Contango' - 'Contangion'?

:rolleyes: Yeah ..... summit like that

john_kane_2

commodities will be have very volatile periods for the next ten years or so with the continued presence of speculators.

the underlying fundamentals of supply and demand should result in gradual increases in prices. buy and hold is the best strategy, though be prepared for a rocky ride. probably a good idea right now to pound average ones way in as prices are pretty high in general. though you never know with this which way the speculators will go. people were expecting oil to go down at $105 and it went all the way up to $135. being bullish on oil but trying to time the market would have cost you a huge run. likewise trying to short would of cost you a huge amount.