Do you think there will be bear rally in coming commodity bear market?
Commodity in nature cyclical. In addition, no asset will go straight up. Now even those who were bullish on commodity are bearish. How did this sentiment change suddenly?
Where is the demand for these commodity products? Some commodity has come down by more than 25%. In some countries, grain has come down by more than 50%.
Even top commodity investors are shifting their funds to other sectors. Some investors say they have now more opportunities to invest than just the commodity market. .
What is the reason for this?
Thanks in advance.
Answers
787 points
DaveDiggz answered 11 months ago …
Well, I think George Soros and Jim Rodgers would disagree with you. Of course no asset goes straight up, but if the overall long term trend is up, then why would you care if it fluctuates as it goes up? That's the benefit for long term, patient investors -- they don't have to worry about the smaller micro-cycles of investing in an asset. All they care about is longer term picture.
So if you believe we're in a long term commodities bull market, then just buy the good stuff and sit back and be patient.
3970 points
EthanR answered 11 months ago …
Do not be too quick to dismiss the bull market in commodities. Commodities are going through a much needed correction, but that doesn't mean the run is over. You might want to go to the following link and watch the video of Jeff Saut, from Raymond James, in which he talks about commodities still being very early in the boom cycle.
http://finance.yahoo.com/tech-ticker
411 points
jester112358 answered 11 months ago …
This naive question is why one should examine the 200 day moving average before concluding an uptrend or downtrend in a sector is occurring. The local (30 day fluctuations) mean nothing unless you are trader) By this measure, all commodities are in an uptrend and have been since 2002. Now for the economic reason why: undercapitilization and investment in this sector for over 15 years. It takes a lot of "overcaptilization" to rectify this much "undercaptilization" for such a long period. There's been a lot of bad investment in non-producing assets like houses and cars and that will continue to de-leverage for quite some time.
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543 points
warren answered 11 months ago …
All great answers. If you look at supply an demand you will see the commodity boom has a long way to run and the precious metals, gold and silver especially, have been held back and have not appreciated as strongly as most others. That will change and they are in my opinion the place to be.
Last weekend I did a quick 10 year chart review found on my website which clearly shows the precious metals bull market quite intact. And I love to hear DaveGigzz talk about whre the BILLIONAIRES are putting their money. They are that rich for a reason and it's not timing, it's riding the primary trend. Listen to the old sages and learn from them and you will become rich beyond your wildesty dreams....in time!
Warren,
www.preciousmetalstockreview.com
139 points
mugsy answered 11 months ago …
I am in 100% agreement with everything Dave, Ethan, Jester and Warren have said. The Markets have been more volatile then I have ever seen, but the Bull Run in Commodities is many years away from a bubble. The world is growing and the supply will not keep up with demand. There is absolutely no shortage of corruption in the world and it is throughout the world, though more concentrated in some areas more then others, but we are extensively connected through the internet. The markets are down as a whole due to the Financial crisis, housing turmoil, lack of liquidity, and therefore sentiment to the downside. Excess printing of US Dollar and huge expanding US debt, oil priced in US Dollars's.
Sectors are moving in opposing directions at the same time. It is nothing we have not seen before in the history of markets. It just feels like the worst thing ever, raining cats and dogs, armagedan. The world will soon end, blah blah blah.
China will reopen its factories and all the smog with it, and demand will continue. India will have a demand, Brazil and emerging markets. Many commodity stocks are way undervalued especially when the commodities themselves (gold spikes up). Those in production with solid financials will rise tremendesly over the years in their attempt to keep up with the Commodity price. Today Cameco is dealing with another flood in their Cigar Lake mine and they are down about 4% while other Uranium stocks are up from 10 to 20%. Uranium rose very high on early speculation, being about $10 a lb in the 70's then rocketing up to about $!40 a lb in 2007. Back to about $59.50 and now $64.50. When Nuclear plants really need that yellowcake the demand will escalate again perhaps more of a slower steady climb but for sure a climb in price either way again. Uranium was extremely volatile, but the long term trend is still upward for sure.
Warren mentions gold and silver, long term bull runs there for sure!!! George Soros had to be begged to stop shorting the Great Britain Pound. His Partner Jim Rogers long term Commodities Bull. These guys don't get to where they are from micro trends but they leverage their money over the years and follow the macro trends. I think they are informed!!!
Ethan, I clicked on your link, but could not find that specific video. Any more guidance in tracking that down would be appreciated. I am interested in seeing it. If you happen to read this, thanks in advance,
PS, I see gold breaking above $1,000 an ounce before the end of 2009 and I see gold hitting $1500 an ounce in less then 5 years, and after some natural consolidation. I see it going higher then that. Silver was under $5.00 an ounce for years, spiked up about 1972 to the low $20's and recently back to about $21.00 an ounce. Down to about $15.00 now, but these are early indicators that it will soar, especially when it breaks above $22. Im sure it will scoot up, then back to support, then continue up from there for long term upwards move in price.
I'm a long term bull in commodities for sure!!!
John Mugsy M
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