I'm a true believer of the conspiracy theory ......... don't ask me how, but I believe the political pressures were behind the commodities dump. The 1% ers and politicos in the know, knew that continued high grain prices would drive every Mid Eastern Country to boil over in protest, causing all the Governments to crumble. It would be a World of crisis with rebellion on every Continent. Certainly not an orderly way to run the World and keep the Sheepies in a zombie state. Put them on the edge of starvation and they begin to open their eyes.
<< <i>I'm a true believer of the conspiracy theory ......... don't ask me how, but I believe the political pressures were behind the commodities dump. The 1% ers and politicos in the know, knew that continued high grain prices would drive every Mid Eastern Country to boil over in protest, causing all the Governments to crumble. It would be a World of crisis with rebellion on every Continent. Certainly not an orderly way to run the World and keep the Sheepies in a zombie state. Put them on the edge of starvation and they begin to open their eyes. >>
Lets say you are right....if so then it is highly unlikely that there will ever be a big, sustained increase in commodities prices for the reasons you outlined above.
There is an article in the 12/9/13 Wall St. Journal titled "Innovation and Investment Pop Commodity Bubble" with the subtitle "Supply-side Economics" written by P. Barta and J.W. Miller
It's a long article, but I'll reproduce a few paragraphs:
The price of nickel ... spiked past $50k/ton in 2007 from less than $10k a few years earlier. With nickel largely controlled by Western companies, China's swelling economy was especially vulnerable--until some of its steel producers figured out how to substitute a lower-grade "nickel pig iron," unlocking a mother lode of cheap supply. The innovation has sent nickel prices tumbling to less than $14k/ton, and turned China into a leading nickel producer.
Economists for years warned that rising demand for natural resources by China and other emerging markets would outstrip supply, leaving the world short of everything from nickel to coal, copper and corn. But a remarkable period of innovation and investment has produced a far different picture. Expected supply has helped moderate commodity prices over the past year after a decade of demand from China helped push many prices into the stratosphere.
The IMF's index of all commodity prices is down about 12% from recent peaks; it had roughly tripled between 2000 and 2011. Of course, price declines are also driven by weaker demand, especially from China, where economic growth has slowed. And prices for many commodities, including oil, remain far above their average from 10 or 15 years ago.
But the global supply picture is the best in years. "It's kind of basic econ 101: Scarcity induces some sort of innovation" said David Jacks, who has studied commodity cycles over the past century. The most widely known innovation is hydraulic fracturing (fracking) which fueled the shale boom by injectin water and other materials in to the earth to unlock oil and gas. But in agriculture, farmers are tapping new patches of arable land, and turning to higher-yielding hybrid seeds.
In the mining industry, drilling companies are using diamond-coated drill bits to reach miles farther beneath the Earth's surface. They also employ aircraft radar to map the geology of remote areas. [Processes] that mix chemicals into minerals to make desired metals rise to the top or sink to the bottom now extract more product than ever from lower-grade deposits.
On top of all that, many projects that were funded years ago-- including new or expanded copper, silver, and nickel mines, have started producing. As a result, mind production has nearly doubled or tripled for every major metal over the past two decades, according to the US Geological survey and other organizations.
Between 2000 and 2012, aluminum output increased from 24.7 to 45.7 million metric tons, and iron ore from 975 million to over 2 billion tons over the same period. Global production in the past decade of corn rose by 270 million tons, the biggest 10-year increase on record and more than triple the gains of the previous decade. Palm oil, walnuts, and almond production have also doubled.
The rest of the article details the innovations in nickel production, and describes how other advanced mining techniques increase the supply of silver, gold, and molybdenum, among other metals as a byproduct of mining copper and other base metals.
The rest of the article details the innovations in nickel production, and describes how other advanced mining techniques increase the supply of silver, gold, and molybdenum, among other metals as a byproduct of mining copper and other base metals.
There's no evidence of this in the gold or silver mining markets. Ore grades are way down with net ounces produced having dropped. You'd think as miners teetering on essentially a zero profit line, or worse yet...bankruptcy, they'd employ these new killer techniques. Instead, they have shuttered mines that were not profitable, shutdown numerous projects including those with huge resources and reserves, etc. Read an article today from August 2013 by SRSRocco that stated that silver ore grades in the past decade has been halved, energy prices have quadrupled, and most silver miner profits are now losses (link below). Show me a combined copper/gold miner that has improved their gold production. The base metal miners aren't exactly hitting it out of the park. This guy has done articles on oil fracking as well calling the whole thing basically a hoax or house of cards. He's not the only one saying that.
Are we in a bottoming process for corn, wheat and sugar now? It certainly would be helpful to the entire commodity sector.
A couple of the author's comments after the article are interesting as well, especially Hecla's profitability back in 2000 when silver was $4/oz. We could be witnessing the death of publicly traded gold and silver miners. Their only hope may be to get out of the line of fire of the naked shorters, hedge funds, and ETF shenanigans (SIL, GDX, GDXJ, GLD, SLV, etc) and take these companies private either through the national govts or investor groups. The other alternative is much, much, higher silver and gold prices. China would love to buy $150 BILL worth in choice gold and silver producers. With that amount they can probably buy all of the NY exchange listed gold and silver miners....70 or 80 of them. The huge base metal miners (BHP, Vale, RIO, TCK, FCX, AngloAmerican, etc.) are not exactly finding a lot of gold with their copper, zinc, and lead. Of this group only FCX even lists gold as one of their end products. In the case of FCX it's about 1 MILL gold ounces per year, or about 1% of world production.
I'm not seeing where all this new gold is coming from with Barrick, Goldcorp, and Newmont all shutting down major projects with huge gold resources. These are potentially being moth-balled for years. Anglo American walked away from their 50% stake ($500 MILL) in Northern Dynasty's $300+ BILL estimated underground resources at the Pebble Project in Alaska.- the largest unmined copper/gold deposit in the world....67 to over 100 MILL oz of gold and 55-80 BILL lbs of copper(NIMBY). Kinross walked away from their $1.2 BILL - 7 MILL gold oz. Fruta del Norte project in Ecuador preferring to give it back to the govt rather than accept an after-the-fact 70% windfall profits tax above their mining cost. Newmont has run into labor issues at their Conga project in Peru...it's going nowhere fast and still years away. Barrick's $9 BILL Pascua-Lama project in Chile/Argentina is on permament hold due to environmental permits being withheld by Chile. The project is 75% complete and was supposed to start producing in 2013/2014. It now looks to be years away....if ever now that NIMBY has taken over. Barrick shelved their part of the 40 MILL gold oz. (1250 tonnes) NovaGold's Donlin Creek project. Even Vale ran away from a huge iron ore project in Argentina. One can only marvel at South African miner Gold Fields with 218 MILL gold oz in reserves and resources ($260 BILL worth) (6800 tonnes of gold or roughly 82% of official US govt gold reserves). They have a $2.2 BILL market cap and can't seem to mine profitably at any gold price. What new innovations are going to help them in their mines that are 3 miles deep? Teleportation might help. Gold from sea water or mining asteroids is starting to look much more likely than new projects sitting underground....lol.
Innovative mining techniques will hardly make up for "innovative" taxation or political string-pulling. High prices is probably the only cure. Though that would probably only be temporary as govt's once again would meddle to stifle projects and mines if easy money is to be found. The price of gold and silver ought to be determined by the companies that mine it and their physical customers....not a few fat cat bankers and speculators behind closed doors. Interesting that the cost to dig an oil well exploded by a factor of >6X from 2000-2007. So no surprise that the price of oil exploded by a similar amount. The cost of gold mining in the past 10 years has exploded...yet the priice of PMs has collapsed. What??? The price to drill an oil well in 2007 was 16X to 40X the cost seen during the 1970's. The silver market has strong demand, rapidly rising production costs where miners are no longer profitable....yet the price of silver has collapsed. What other commodity "market" works like that? While the GLD inventory has dropped some 40% since the 2011 peak, the SLV inventory is nearly unchanged. Hmm.
<< <i>The price of nickel ... spiked past $50k/ton in 2007 from less than $10k a few years earlier. With nickel largely controlled by Western companies, China's swelling economy was especially vulnerable--until some of its steel producers figured out how to substitute a lower-grade "nickel pig iron," unlocking a mother lode of cheap supply. The innovation has sent nickel prices tumbling to less than $14k/ton, and turned China into a leading nickel producer. >>
In 2007 there was a "perfect storm" of events that led to the price spike of nickel. China had enormous demand for stainless steel, which has a large component of nickel for the most common SS alloys. Also, aerospace demand for Invar peaked in 2007. Invar is 36% nickel and is used for mandrels in carbon fiber manufacturing, where a single mandrel can use hundreds of thousands of pounds for Invar. Since 2007, prices have dropped for nickel because of the above mentioned sources and production efficiencies, even though industrial demand is still high.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
Are we in a bottoming process for corn, wheat and sugar now? It certainly would be helpful to the entire commodity sector.
Quite possibly Roadrunner. I've bought sugar and coffee this year for nice trades. I do think they are bottoming. Interesting that the charts of PMs are so similar to other commodities. Kind of give the feeling that PMs are no different than other commods.
<< <i>Are we in a bottoming process for corn, wheat and sugar now? It certainly would be helpful to the entire commodity sector.
Quite possibly Roadrunner. I've bought sugar and coffee this year for nice trades. I do think they are bottoming. Interesting that the charts of PMs are so similar to other commodities. Kind of give the feeling that PMs are no different than other commods. >>
In 3 year downturns I'd agree that nearly all commods basically morph into the same dead horse. But one realizes that gold is not just any commod since CB's vault 30,000 tonnes of the stuff. I have no idea how many other commods they might possibly vault...if any. Some of those oil tankers semi-permanently parked in Hong Kong and other places around the world could be owned by banks such as JPM and GS. Not quite vaulted but getting closer. As far as longer and intermediate term price movements, PMs may not be distinguishable from the prices of other commodities. Gold is probably still the only real extinguisher of sovereign/CB debt. That is why it remains in the vaults....or at least listed on the "inventory."
<< <i>Not going to repost charts, but will update with closing prices form yesterday on the above 3 charts.
Corn on 9-19 was 6.93. On 11-21 was 5.99 for a drop of 13.56%, currently in a support zone going back 13 months. Wheat on 9-19 was 6.75. On 11-21 was 6.09 for a drop of 9.78% at a 15 month low. Soybeans on 9-19 was 1336. On 11-21 was 1151 for a drop of 13.85% and at 13 month low.
Interesting to look back at the comments from the beginning of the thread. Almost everyone saw the charts as going higher, yet 5 months later prices on average are 15% lower. Im not trying to single anyone out, just demonstrating that this is why so few people have confidence in technical analysis and are confused by the relationship of expectations in fundamental and technical analysis. >>
Update to today.
Corn at $6.18 Wheat at $6.18 Soybeans at $12.15. >>
Updated 8-31-14
Corn at 3.63 Wheat at 5.63 Soybeans at 10.23
3 years later neither "inflation" nor drought can push grains prices higher.
<< <i>The corn & beans look really good this year. Bumper crop territory. Other than that, California is running out of water. >>
Some water, amazingly, fell right out of the sky the past couple of days! And some of the wise sages predict that this phenomenon could continue, off and on, over the next few months!
<< <i>The corn & beans look really good this year. Bumper crop territory. Other than that, California is running out of water. >>
Some water, amazingly, fell right out of the sky the past couple of days! And some of the wise sages predict that this phenomenon could continue, off and on, over the next few months! >>
Comments
Im speechless.
Knowledge is the enemy of fear
I'm a true believer of the conspiracy theory ......... don't ask me how, but I believe the political pressures were behind the commodities dump. The 1% ers and politicos in the know, knew that continued high grain prices would drive every Mid Eastern Country to boil over in protest, causing all the Governments to crumble. It would be a World of crisis with rebellion on every Continent. Certainly not an orderly way to run the World and keep the Sheepies in a zombie state. Put them on the edge of starvation and they begin to open their eyes.
<< <i>I'm a true believer of the conspiracy theory ......... don't ask me how, but I believe the political pressures were behind the commodities dump. The 1% ers and politicos in the know, knew that continued high grain prices would drive every Mid Eastern Country to boil over in protest, causing all the Governments to crumble. It would be a World of crisis with rebellion on every Continent. Certainly not an orderly way to run the World and keep the Sheepies in a zombie state. Put them on the edge of starvation and they begin to open their eyes. >>
Lets say you are right....if so then it is highly unlikely that there will ever be a big, sustained increase in commodities prices for the reasons you outlined above.
Knowledge is the enemy of fear
It's a long article, but I'll reproduce a few paragraphs:
The price of nickel ... spiked past $50k/ton in 2007 from less than $10k a few years earlier. With nickel largely controlled by Western companies, China's swelling economy was especially vulnerable--until some of its steel producers figured out how to substitute a lower-grade "nickel pig iron," unlocking a mother lode of cheap supply. The innovation has sent nickel prices tumbling to less than $14k/ton, and turned China into a leading nickel producer.
Economists for years warned that rising demand for natural resources by China and other emerging markets would outstrip supply, leaving the world short of everything from nickel to coal, copper and corn. But a remarkable period of innovation and investment has produced a far different picture. Expected supply has helped moderate commodity prices over the past year after a decade of demand from China helped push many prices into the stratosphere.
The IMF's index of all commodity prices is down about 12% from recent peaks; it had roughly tripled between 2000 and 2011. Of course, price declines are also driven by weaker demand, especially from China, where economic growth has slowed. And prices for many commodities, including oil, remain far above their average from 10 or 15 years ago.
But the global supply picture is the best in years. "It's kind of basic econ 101: Scarcity induces some sort of innovation" said David Jacks, who has studied commodity cycles over the past century. The most widely known innovation is hydraulic fracturing (fracking) which fueled the shale boom by injectin water and other materials in to the earth to unlock oil and gas. But in agriculture, farmers are tapping new patches of arable land, and turning to higher-yielding hybrid seeds.
In the mining industry, drilling companies are using diamond-coated drill bits to reach miles farther beneath the Earth's surface. They also employ aircraft radar to map the geology of remote areas. [Processes] that mix chemicals into minerals to make desired metals rise to the top or sink to the bottom now extract more product than ever from lower-grade deposits.
On top of all that, many projects that were funded years ago-- including new or expanded copper, silver, and nickel mines, have started producing. As a result, mind production has nearly doubled or tripled for every major metal over the past two decades, according to the US Geological survey and other organizations.
Between 2000 and 2012, aluminum output increased from 24.7 to 45.7 million metric tons, and iron ore from 975 million to over 2 billion tons over the same period. Global production in the past decade of corn rose by 270 million tons, the biggest 10-year increase on record and more than triple the gains of the previous decade. Palm oil, walnuts, and almond production have also doubled.
The rest of the article details the innovations in nickel production, and describes how other advanced mining techniques increase the supply of silver, gold, and molybdenum, among other metals as a byproduct of mining copper and other base metals.
Liberty: Parent of Science & Industry
Knowledge is the enemy of fear
There's no evidence of this in the gold or silver mining markets. Ore grades are way down with net ounces produced having dropped. You'd think as miners teetering on essentially a zero profit line, or worse yet...bankruptcy, they'd employ these new killer techniques. Instead, they have shuttered mines that were not profitable, shutdown numerous projects including those with huge resources and reserves, etc. Read an article today from August 2013 by SRSRocco that stated that silver ore grades in the past decade has been halved, energy prices have quadrupled, and most silver miner profits are now losses (link below). Show me a combined copper/gold miner that has improved their gold production. The base metal miners aren't exactly hitting it out of the park. This guy has done articles on oil fracking as well calling the whole thing basically a hoax or house of cards. He's not the only one saying that.
Are we in a bottoming process for corn, wheat and sugar now? It certainly would be helpful to the entire commodity sector.
August silver miner report - things are worse 4 months later
A couple of the author's comments after the article are interesting as well, especially Hecla's profitability back in 2000 when silver was $4/oz. We could be witnessing the death of publicly traded gold and silver miners. Their only hope may be to get out of the line of fire of the naked shorters, hedge funds, and ETF shenanigans (SIL, GDX, GDXJ, GLD, SLV, etc) and take these companies private either through the national govts or investor groups. The other alternative is much, much, higher silver and gold prices. China would love to buy $150 BILL worth in choice gold and silver producers. With that amount they can probably buy all of the NY exchange listed gold and silver miners....70 or 80 of them. The huge base metal miners (BHP, Vale, RIO, TCK, FCX, AngloAmerican, etc.) are not exactly finding a lot of gold with their copper, zinc, and lead. Of this group only FCX even lists gold as one of their end products. In the case of FCX it's about 1 MILL gold ounces per year, or about 1% of world production.
I'm not seeing where all this new gold is coming from with Barrick, Goldcorp, and Newmont all shutting down major projects with huge gold resources. These are potentially being moth-balled for years. Anglo American walked away from their 50% stake ($500 MILL) in Northern Dynasty's $300+ BILL estimated underground resources at the Pebble Project in Alaska.- the largest unmined copper/gold deposit in the world....67 to over 100 MILL oz of gold and 55-80 BILL lbs of copper(NIMBY). Kinross walked away from their $1.2 BILL - 7 MILL gold oz. Fruta del Norte project in Ecuador preferring to give it back to the govt rather than accept an after-the-fact 70% windfall profits tax above their mining cost. Newmont has run into labor issues at their Conga project in Peru...it's going nowhere fast and still years away. Barrick's $9 BILL Pascua-Lama project in Chile/Argentina is on permament hold due to environmental permits being withheld by Chile. The project is 75% complete and was supposed to start producing in 2013/2014. It now looks to be years away....if ever now that NIMBY has taken over. Barrick shelved their part of the 40 MILL gold oz. (1250 tonnes) NovaGold's Donlin Creek project. Even Vale ran away from a huge iron ore project in Argentina. One can only marvel at South African miner Gold Fields with 218 MILL gold oz in reserves and resources ($260 BILL worth) (6800 tonnes of gold or roughly 82% of official US govt gold reserves). They have a $2.2 BILL market cap and can't seem to mine profitably at any gold price. What new innovations are going to help them in their mines that are 3 miles deep? Teleportation might help. Gold from sea water or mining asteroids is starting to look much more likely than new projects sitting underground....lol.
Innovative mining techniques will hardly make up for "innovative" taxation or political string-pulling. High prices is probably the only cure. Though that would probably only be temporary as govt's once again would meddle to stifle projects and mines if easy money is to be found. The price of gold and silver ought to be determined by the companies that mine it and their physical customers....not a few fat cat bankers and speculators behind closed doors. Interesting that the cost to dig an oil well exploded by a factor of >6X from 2000-2007. So no surprise that the price of oil exploded by a similar amount. The cost of gold mining in the past 10 years has exploded...yet the priice of PMs has collapsed. What??? The price to drill an oil well in 2007 was 16X to 40X the cost seen during the 1970's. The silver market has strong demand, rapidly rising production costs where miners are no longer profitable....yet the price of silver has collapsed. What other commodity "market" works like that? While the GLD inventory has dropped some 40% since the 2011 peak, the SLV inventory is nearly unchanged. Hmm.
Goldies 51
<< <i>The price of nickel ... spiked past $50k/ton in 2007 from less than $10k a few years earlier. With nickel largely controlled by Western companies, China's swelling economy was especially vulnerable--until some of its steel producers figured out how to substitute a lower-grade "nickel pig iron," unlocking a mother lode of cheap supply. The innovation has sent nickel prices tumbling to less than $14k/ton, and turned China into a leading nickel producer. >>
In 2007 there was a "perfect storm" of events that led to the price spike of nickel. China had enormous demand for stainless steel, which has a large component of nickel for the most common SS alloys. Also, aerospace demand for Invar peaked in 2007. Invar is 36% nickel and is used for mandrels in carbon fiber manufacturing, where a single mandrel can use hundreds of thousands of pounds for Invar. Since 2007, prices have dropped for nickel because of the above mentioned sources and production efficiencies, even though industrial demand is still high.
Quite possibly Roadrunner. I've bought sugar and coffee this year for nice trades. I do think they are bottoming. Interesting that the charts of PMs are so similar to other commodities. Kind of give the feeling that PMs are no different than other commods.
Knowledge is the enemy of fear
<< <i>Are we in a bottoming process for corn, wheat and sugar now? It certainly would be helpful to the entire commodity sector.
Quite possibly Roadrunner. I've bought sugar and coffee this year for nice trades. I do think they are bottoming. Interesting that the charts of PMs are so similar to other commodities. Kind of give the feeling that PMs are no different than other commods. >>
In 3 year downturns I'd agree that nearly all commods basically morph into the same dead horse. But one realizes that gold is not just any commod since CB's vault 30,000 tonnes of the stuff. I have no idea how many other
commods they might possibly vault...if any. Some of those oil tankers semi-permanently parked in Hong Kong and other places around the world could be owned by banks such as JPM and GS. Not quite vaulted but getting
closer. As far as longer and intermediate term price movements, PMs may not be distinguishable from the prices of other commodities. Gold is probably still the only real extinguisher of sovereign/CB debt. That is why it remains
in the vaults....or at least listed on the "inventory."
<< <i>Originially written 11-22-11
<< <i>Not going to repost charts, but will update with closing prices form yesterday on the above 3 charts.
Corn on 9-19 was 6.93. On 11-21 was 5.99 for a drop of 13.56%, currently in a support zone going back 13 months.
Wheat on 9-19 was 6.75. On 11-21 was 6.09 for a drop of 9.78% at a 15 month low.
Soybeans on 9-19 was 1336. On 11-21 was 1151 for a drop of 13.85% and at 13 month low.
Interesting to look back at the comments from the beginning of the thread. Almost everyone saw the charts as going higher, yet 5 months later prices on average are 15% lower. Im not trying to single anyone out, just demonstrating that this is why so few people have confidence in technical analysis and are confused by the relationship of expectations in fundamental and technical analysis. >>
Update to today.
Corn at $6.18
Wheat at $6.18
Soybeans at $12.15. >>
Updated 8-31-14
Corn at 3.63
Wheat at 5.63
Soybeans at 10.23
3 years later neither "inflation" nor drought can push grains prices higher.
Knowledge is the enemy of fear
I knew it would happen.
<< <i>The corn & beans look really good this year. Bumper crop territory. Other than that, California is running out of water. >>
Some water, amazingly, fell right out of the sky the past couple of days! And some of the wise sages predict that this phenomenon could continue, off and on, over the next few months!
Liberty: Parent of Science & Industry
<< <i>
<< <i>The corn & beans look really good this year. Bumper crop territory. Other than that, California is running out of water. >>
Some water, amazingly, fell right out of the sky the past couple of days! And some of the wise sages predict that this phenomenon could continue, off and on, over the next few months! >>
Is there an over/under for inches???