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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Fiscally Conservative who wrote (187400)	12/30/2014 2:05:05 PM
From: Biomaven	Read Replies (4) of 206358

>>With the world flush with liquidity via currency cash why are world wide commodities falling. My own (partial) explanation is that the very low interest rates and easy money that have prevailed for the last several years have enabled commodity suppliers to ramp-up supply faster than demand. Certainly the oil weakness is primarily supply-driven rather than demand-driven. I'd also add efficiencies on the demand side. Look at the automotive industry for example. There is a lot less steel in a car than there used to be, and much of that steel is now recycled via mini-mills instead of being new production. The average fuel economy of new cars is now over 25 MPG. Some part of the weak commodity prices also simply reflect the strong dollar. The final piece of the explanation is that the Chinese rate of growth was unsustainable. As that has now slacked off some, they can no longer make up for weak demand in the rest of the world.

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