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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (17134)	7/28/2015 9:57:08 AM
From: The Ox	Read Replies (1) \| Respond to of 33421

I believe there's a lot more going on than simple manipulation. That's an easy excuse and it gives people a simple explanation that they can "file away", instead of understanding more of the dynamics, what's really going on within these markets. I believe the ramp up in commodities was partially a result of the tech bubble bursting in 2000-01. As money fled stocks, it looked for a home in other investment vehicles. Simultaneously, we had more and more pension funds getting into commodity investing, thinking they were diversifying, but, in reality, they were following the crowd. As everyone piled into commodities during the first part of the last decade, oil rose from 25-30 to well over 100. Copper ramped, gold ramped, silver ramped....pick a commodity and the demand was rising for numerous reasons. Ten years later, in 2011, the prices were so far out of whack that "supply/demand" metrics have started to take over these "trading vehicles". The above is a "cookie cutter" explanation and also a bit simple in it's scope but the basis is solid, IMO. #1 in the last decade was China buying more and more resources. #2, as funds - sovereign wealth, hedge and pensions all added more to their commodity holdings, #3, within these commodity industries, companies were also starting to buy more assets at ever increasing costs, #4, as the public became more aware of the strong price trends, more piled into commodity stocks. Add these up and we saw a great rush into commodities.....