Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (104551)	5/24/2001 1:43:16 PM
From: craig crawford	Read Replies (1) \| Respond to of 436258

>> I'm looking at a table of data published in 1931 by the National Industrial Conference Board that shows that wholesale prices in the US declined 28.6% from July, 1929 (which is when the depression started in the US) to July, 1931. << Hold on for a minute there chief. The market PEAKED in 1929. The depression didn't kick in until a couple of years later. Our market peaked in 1998 or Jan/March 2000 depending on who you talk to, and now it's a couple of years later. The stock market peaked in the late 60's and commodities boomed a couple of years later in the 70's. Are you seeing a pattern here? >> In fact, the decline in commodity prices preceded the Great Depression Crude oil's high in the 1920's was on October, 1926; coal, December, 1926; copper, March, 1929. Yet they continued to fall - from December, 1929 to July, 1931, crude oil fell 81.69%; copper, 56.74%, but coal only 6.88%.<< The whole point is, people chase paper assets at market tops and ignore natural resources and commodities. That is why you see a major decline in commodities prices in the years leading to a market peak, even in the face of what seems like strong economic activity which should give commodities a lift from the strong demand. Then after the market tops out and crashes, there is always a bounce rally for a year or two before people really get discouraged, and then you see the gradual shift to commodities after people discover that their precious stocks aren't coming back and that chasing paper assets and ignoring hard assets led to a supply/demand imbalance. >> I haven't studied the rebound in commodity prices yet but expect that to some extent it was due in part to government stabilization programs and devaluation of the currency caused by going off the gold standard. << The whole point is the govt did devalue the dollar by going off the gold standard. Roosevelt wanted to print his way out of a deflation (sound familiar?) It's after all this money was printed and sloshing around that of course you it started surfacing in the prices of commodities. Everything is right on schedule. Like I said, don't fall prey to conventional wisdom which says that commodities are going to suck because economic conditions are weakening. Just look at the 70's and 30's as examples. If you read that article I posted a few posts back you can clearly see the cycles on the charts.