[T.S.R:17353] The Rout Of Precious Metals Indicates End Of Commodities Boom

Quite contrary to what Jim Rogers has been shilling out to investors, the recent rout in precious metals signals the end of the trade rather than a simple correction in a bull market. To be honest all commodity guys speak of cycles that stretch 10 years. Well, what if those ten years are over and now no one wants the shiny metals group any longer?

The commodity boom may seem like a recent phenomenon, but in fact, it started 115 months ago, in 2001, according to Michael Darda, chief economist and chief market strategist at MKM Partners.

That time frame is worth noting, because it's about how long the tech boom lasted (114 months) and how long the housing boom lasted (113 months), Darda said in a Friday research note. "Most observers think 'it's different this time' for commodity prices," Darda said. And while it may be, he cautions that, in the past, "'it's different this time' has proven to be a costly mantra."

This past week, the boom appeared to have stalled, as commodity prices plunged on fears of a slowing global economy and falling demand for gasoline, in turn triggered by hard-to-swallow prices at the gas pump. On Wednesday,U.S. light crude sank 5.5 percent, while silver futures tanked 7.7 percent.

Oil prices traded slightly lower on Friday, which some market observers credited to strength in the dollar [.DXY  75.76    0.29  (+0.38%)   ], which gained Friday against a basket of currencies as the euro fell.

While the dollar and oil may be trading in tandem Friday, a falling dollar did not play a big role in the commodity price boom these past 115 months, Darda said, pointing out that the dollar fell only 40 percent from its peak in 2001, while commodities soared 240 percent.

Instead, the dominant force in commodity prices has been China, he said.

In a Thursday research note, Darda said commodity prices are sliding because of a hike in reserve requirements for Chinese banks, which has slowed money growth and increased risk spreads in China. Another factor? A contracting balance sheet for the European Central Bank, he says. 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

--
For Anything related with Stock market be Online at
http://www.niftyviews.com/
 
Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234
 
FOR TRIAL STOCK/NIFTY/OPTION CALLS
 
 
You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group.
To post to this group, send an email to STOCKRESEARCHER@googlegroups.com
 
To unsubscribe email
Stockresearcher-unsubscribe@googlegroups.com
 
for more info visit
http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB
.
This is Not a Spam Mail.
Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture."