tag:blogger.com,1999:blog-6616959642391988608.post815861788272329765..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Long-term trend of commodity pricesScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6616959642391988608.post-37319705642551711352010-03-25T10:06:27.864-07:002010-03-25T10:06:27.864-07:00Re: global money supply. Don't waste your time...Re: global money supply. Don't waste your time trying to figure out what it is and what it's doing. Just observe how gold and commodities are behaving relative to the major currencies, and that will give you at least some idea of whether global monetary policy is too tight or too easy.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-40439716557995004292010-03-25T10:06:26.449-07:002010-03-25T10:06:26.449-07:00Re: global money supply. Don't waste your time...Re: global money supply. Don't waste your time trying to figure out what it is and what it's doing. Just observe how gold and commodities are behaving relative to the major currencies, and that will give you at least some idea of whether global monetary policy is too tight or too easy.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-62213939943538774772010-03-25T09:51:14.589-07:002010-03-25T09:51:14.589-07:00Andy: John has some good suggestions. It's not...Andy: John has some good suggestions. It's not easy for an individual to invest in commodities, unless you can find a fund that does it for you using futures. And if commodity futures are not priced cheaply (e.g., if prices aren't backwardated as you suggest), then making money on commodities as an asset class is difficult even for the pros. In any event, investing in commodities is a Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-74167531810839536422010-03-25T07:48:36.295-07:002010-03-25T07:48:36.295-07:00Andy -
May I make a humble suggestion? For a long...Andy -<br /><br />May I make a humble suggestion? For a long term commodity play take a look at BHP Billiton (BHP - NYSE). If you seek commodity exposure you have it with bhp in spades. Oil, gas, copper, iron, gold, virtually all of it. Its a stock so there is not the bang for the buck you might get with a futures contract but if you think commodities prices are going higher but don't know Johnhttps://www.blogger.com/profile/11652253509768573561noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-16235167110411787832010-03-25T05:21:05.483-07:002010-03-25T05:21:05.483-07:00Scott, one interesting question is how to invest ...Scott, one interesting question is how to invest in commodities. If you look into the source of return in the major commodity indices, a big component is the "roll return" of rolling futures contracts. In the past, during periods of shortage, the front month contract frequently traded at a premium (backwardation to the experts) and there was a positive impact from rolling. With the Andyhttps://www.blogger.com/profile/03703190098265499879noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-41312170866287666242010-03-24T21:58:25.815-07:002010-03-24T21:58:25.815-07:00John-
My hope is this: Eventually there is so muc...John-<br /><br />My hope is this: Eventually there is so much cash out there on the sidelines, and eventually there are a few good jobs reports in a row, meaning that investors start investing, then confidence builds, and we get a sustained, perhaps even secular bull market. <br /><br />I like your writing--"cash is trash," etc. <br /><br />I would like Scott to answer about the global Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-84570080055989405342010-03-24T21:57:24.599-07:002010-03-24T21:57:24.599-07:00puffer: I don't know why you would expect a st...puffer: I don't know why you would expect a strong correlation between housing and commodities. Those markets are VERY different from each other in all but one respect: they both deal with physical (tangible) things, and tangible things tend to go up over time by the rate of inflation. But changing inflation expectations and changing monetary conditions can skew things for years at a time. Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-61549713928124584812010-03-24T19:58:17.955-07:002010-03-24T19:58:17.955-07:00Thanks for posting the longer duration chart. But...Thanks for posting the longer duration chart. But this does not make a lot of sense to me...when you compare the long term trend in housing prices to commodity prices, there is virtually NO correlation. Between 1970 and 2000, nominal housing prices increased at roughly the same rate regardless of inflation/commodity prices. Doesn't this suggest that there other, more significant, factors atpufferhttps://www.blogger.com/profile/17799406540179163330noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-26349662792914793472010-03-24T18:48:06.178-07:002010-03-24T18:48:06.178-07:00Well Ben you have a decent case for low inflation ...Well Ben you have a decent case for low inflation - for a while yet. Housing is still a mess and commercal real estate is certainly weak for the most part and the Greek debt troubles don't help. Portugal's debt downgrade and Spain's private banking balance sheet mysteries compound the worries. Lots of stuff out there to scare money looking for a decent return. Yet, yet, bond king BillJohnhttps://www.blogger.com/profile/11652253509768573561noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-82661329703863646262010-03-24T17:57:27.416-07:002010-03-24T17:57:27.416-07:00At the risk of blowing one note, does not the char...At the risk of blowing one note, does not the chart start to look funny in recent years? Especially after 2005? More speculative perhaps?<br /><br />Has the global monetary supply ramped up that much? Does anyone even know what is the global monetary supply? <br /><br />Can we compare global money supply in earlier periods to the current period, or the 2005 to 2008 period? My guess is that we areBenjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-46546252663126355962010-03-24T17:04:34.112-07:002010-03-24T17:04:34.112-07:00In real terms commodity prices tend to rise during...In real terms commodity prices tend to rise during times of high inflation, and fall in times of low and stable inflation.<br /><br />In real terms, the CRB Spot index fell about 50% from 1970 to 2003; it fell about 70% from 1975 (the peak) to 2003. It has risen about 60% from 2003 to today.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-22136347083937983012010-03-24T16:56:30.988-07:002010-03-24T16:56:30.988-07:00After adjusting for inflation, what are the long-t...After adjusting for inflation, what are the long-term trends? I've always thought that the inflation-adjusted price for virtually any commodity trends down over time. Recall for example the infamous Simon-Ehrlich bet in the 90s.Milo Minderbinderhttps://www.blogger.com/profile/08839733123224452710noreply@blogger.com