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Thread: Commodities are rising fast.

  1. #1

    Commodities are rising fast.

    Most basic commodities like copper, corn, oil, soybeans, etc have been rising fast the last few months. Could this finally be the straw that breaks the dollar's back?

    On the one hand, the commodity price rises look ominous, on the other hand as much as the fed has printed we still haven't hit the record highs from back around 2014.

    Anyway it sure seems to be getting "interesting". I've said for the longest time that I think the first inflation symptom everyone is going to notice is the price of oil. That still has a long ways to go but it just hit $60 today.



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  3. #2
    And natural gas has passed $3. We’ll see what prices at the pump, home heating oil, natural gas and propane do over the next month.
    I like the energy sector right now..
    "Nobody wins in a Dairy Challenge" ~ Kenny Rogers, RIP


    "When a man who is honestly mistaken hears the truth, he will either quit being mistaken, or cease to be honest." ~ anonymous


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    Is in the hands of foolsĒ ~ King Crimson

  4. #3
    Quote Originally Posted by sam1952 View Post
    And natural gas has passed $3. We’ll see what prices at the pump, home heating oil, natural gas and propane do over the next month.
    I like the energy sector right now..
    Yeah, me too. I bought a bunch of oil stocks a couple months go. That's working out well so far.

  5. #4
    Commodities took a break for a couple months but are now surging again. Copper just hit and all time record high.

  6. #5
    You have copper and palladium at or near all time highs , gold still 150 off but sure to get there once people figure out what a bargain it is , silver still cheap , fuel costs will rise this summer. Commodities may be rising but dont yet reflect the amount of money pumped into the system the past 12 years. Platinum has just recently moved back where it should have been all along .One yr oil forecast is 10 dollars over the closing price yesterday .
    Last edited by oyarde; 05-07-2021 at 10:11 AM.
    Do something Danke

  7. #6
    Quote Originally Posted by oyarde View Post
    You have copper and palladium at or near all time highs , gold still 150 off but sure to get there once people figure out what a bargain it is , silver still cheap , fuel costs will rise this summer. Commodities may be rising but dont yet reflect the amount of money pumped into the system the past 12 years. Platinum has just recently moved back where it should have been all along .One yr oil forecast is 10 dollars over the closing price yesterday .
    That's the understatement of the year!

    The Fed went from the total amount printed of less than a trillion to almost 8 trillion in the last 12 years and they're just getting started. That means that all things being equal prices should go up 8 times. Yeah, yeah, I know some people are going to say "all things are not equal" but nothing is going to offset increasing the monetary base by a factor of 10. Plus every time I get that response they can never tell me any details. Actually the only thing that would make the dollar gain value would be more demand and if anything that may also collapse. Pretty much the whole world uses dollars right now, which means demand has peaked and has no where go but down.

  8. #7
    Quote Originally Posted by Madison320 View Post
    That's the understatement of the year!

    The Fed went from the total amount printed of less than a trillion to almost 8 trillion in the last 12 years and they're just getting started. That means that all things being equal prices should go up 8 times. Yeah, yeah, I know some people are going to say "all things are not equal" but nothing is going to offset increasing the monetary base by a factor of 10. Plus every time I get that response they can never tell me any details. Actually the only thing that would make the dollar gain value would be more demand and if anything that may also collapse. Pretty much the whole world uses dollars right now, which means demand has peaked and has no where go but down.
    Increasing the money supply by 8x doesn't imply prices rise by 8x. You have productivity growth and population growth. The number that matters is what is in the hands of people who would bid up prices.

    Smart Austrian's take on this

    After that crisis, the Fed began quantitative easing, which massively expanded its balance sheet. At the same time, commercial banks were busy shrinking their loan books and writing off losses from mortgage debt and securities, which meant the Fedís injections did little more than offset the contraction of commercial bank balance sheets. As a result, money growth from 2010-19, as measured by the Fedís broadest money measure, M2, averaged only 5.8% a year.

    While money on the Fedís books grew rapidly, money in the hands of the public grew slowly. Spending and inflation were restrained, and the postcrisis recovery was anemic with inflation persistently below the Fedís target.
    https://www.wsj.com/articles/the-mon...re-11613944730

  9. #8
    Quote Originally Posted by Krugminator2 View Post
    Increasing the money supply by 8x doesn't imply prices rise by 8x. You have productivity growth and population growth. The number that matters is what is in the hands of people who would bid up prices.

    Smart Austrian's take on this



    https://www.wsj.com/articles/the-mon...re-11613944730
    I doubt productivity has increased 8x, it's probably fallen, given the growth in government over the last 12 years.

    An increase in the monetary base drives future increases in M1,M2,M3 not the other way around. Using derivatives of the monetary base (M1,M2,M3) to predict future price increases is like using wet sidewalks to predict rain.

    If you're right and prices don't increase in proportion to the monetary base we can all go home and get stimulus checks.

    I think it's an inescapable mathematical fact that prices will eventually catch up to the monetary base. The hard part is predicting when.
    Last edited by Madison320; 05-08-2021 at 11:50 AM.



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  11. #9
    Quote Originally Posted by Madison320 View Post
    I doubt productivity has increased 8x, it's probably fallen, given the growth in government over the last 12 yeara

    If you're right and prices don't increase in proportion to the monetary base we can all go home and get stimulus checks.

    I think it's an inescapable mathematical fact that prices will eventually catch up to the monetary base. The hard part is predicting when.
    If M2 grew at 2% and productivity grew at 2% you would zero inflation over the long term.

    Stimulus checks are helicopter money and inflationary. They increase M2.

    I thought money was far too tight after the financial crisis. History shows that view was correct. There was little inflation. Now money is extremely loose. M2 went up by 25% in a year and is going to grow by double digits this year. You will have an economic boom followed by higher consumer prices. I don't think there will be out of control inflation anytime soon because I think most people still think the Fed will throw on the breaks but I wouldn't be stunned to see 4-6% this year and next.

  12. #10
    Quote Originally Posted by Madison320 View Post
    Commodities took a break for a couple months but are now surging again. Copper just hit and all time record high.
    Cool!

    https://www.coinflation.com/coins/ba...alculator.html

    I have been collecting copper pennies for some time. It won't make a person rich, but I have a love for old coins.

    5 cent nickels are also worth more than face.

    Heck, the zinc pennies may soon be worth more for the metal than face.
    Last edited by RJB; 05-08-2021 at 02:08 PM.
    ...

  13. #11
    They will allow commodities to rise for some time then they will crush them, from a trading perspective.
    This doesn't mean they won't rise over many years, I'm just saying they will short them and protect the dollar
    when the time is right to do so. Don't tell me they can't.

    These people have total control over all commodities priced in dollars and financial markets.

  14. #12
    Quote Originally Posted by Snowball View Post
    They will allow commodities.....

    These people have total control over all commodities priced in dollars and financial markets.

    "They"



    Last edited by Krugminator2; 05-08-2021 at 04:19 PM.

  15. #13
    Quote Originally Posted by Krugminator2 View Post
    "They"
    Yes, "They".

    and ?

  16. #14
    Quote Originally Posted by Snowball View Post
    Yes, "They".

    and ?
    Who is "they' and how are "they" going to drive down the price of commodities.

    Do "they" have a secret stash of tons of copper hidden somewhere that they're going to dump on the market?
    Last edited by Madison320; 05-09-2021 at 10:07 AM.

  17. #15
    Quote Originally Posted by Krugminator2 View Post
    "They"



    I love that first picture.

  18. #16
    Quote Originally Posted by sam1952 View Post
    And natural gas has passed $3. We’ll see what prices at the pump, home heating oil, natural gas and propane do over the next month.
    I like the energy sector right now..
    I'm in Lithium.



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  20. #17
    Quote Originally Posted by Madison320 View Post
    Who is "they' and how are "they" going to drive down the price of commodities.

    Do "they" have a secret stash of tons of copper hidden somewhere that they're going to dump on the market?
    "They", in this instance, being the commodity brokerage houses. You know it's all paper games that may or may not be tied to physical assets, right? Manipulate the paper, manipulate the physical asset. You don't think that paper manipulation of precious metals is where the commodity houses draw the line, do ya?
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  21. #18
    Quote Originally Posted by Madison320 View Post
    Who is "they' and how are "they" going to drive down the price of commodities.

    Do "they" have a secret stash of tons of copper hidden somewhere that they're going to dump on the market?
    I want you to consider something. Our so-called "free" markets (a scantily used phrase in recent years) do not exist.
    Although there have been times in American history when markets were more-or-less free, the last 22 years are not among them.
    Next, I want you to consider what drives price hikes and price drops. It has nothing at all to do with demand or scarcity anymore.
    Demand and scarcity only vary greatly in: 1) truly extraordinary circumstances, and, 2) temporary spurts, which are not very great.
    The causal factor of price discovery in today's faux-markets is concerted manipulation. That manipulation's drive is profit. Profit motive
    puts the society in the vulnerable position of being subjugated to wild swings of speculative frenzy that pervert the costs, coupled with
    currency debasement, and currency debasement is the tool by which manipulation and narrative dissemination grip markets.

    After the planned amount of profit is made, indeed, during the pinnacle and plateau phases of that "trade", the other way down is already being
    taken as a new position, thereby yielding what is always the plan - private profit - in both directions. The requisite media narratives and astroturf
    "events" that pop up in media on a regular basis are often committed by operatives in the real world who are under the payroll of the profiteers.

  22. #19
    I think everyone is misinterpreting what JPow means by "inflation is transitory". The definition of transitory that's being circulated is something like meaning it's short term or fleeting. If you look up the legal definition of the word transitory it has a somewhat nuanced but a clearly different meaning. According to Black's Law, transitory means to move from place to place. A nuanced difference but a difference nonetheless. I think the legal definition is being used by JPow and his ilk, not the more circulated definition of being of short duration. This would make more sense with how we are seeing inflation take hold, since it is appearing in sector after sector, not all at once. Housing first, then lumber, then food, then copper, etc etc until everything has eventually incorporated inflation. Whether it is short term has yet to be seen. Inflation is already moving "place to place" and better fits with the legal definition of transitory. A dollar crash, revaluation and reset under the new digital system would eventually mean inflation has ended, though, of course. That would make it inflation both "short term" and "place to place".
    Last edited by devil21; 05-11-2021 at 12:55 PM.
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  23. #20
    Quote Originally Posted by devil21 View Post
    "They", in this instance, being the commodity brokerage houses. You know it's all paper games that may or may not be tied to physical assets, right? Manipulate the paper, manipulate the physical asset. You don't think that paper manipulation of precious metals is where the commodity houses draw the line, do ya?
    The only way I can see that they could manipulate the price is if the "paper" price was different from the "actual" price of the commodity. People actually buy copper for example in manufacturing. I'm guessing if the spot price was different from the actual price people would be doing that thing where you buy the cheap version and sell the expensive version (I can't remember the term for that). I'm assuming it's like gold where the spot price is near the actual price to buy physical gold.

    Anyway my point is that commodities are not like bitcoin or even tesla where the price has no real relationship with reality.

  24. #21
    Quote Originally Posted by Madison320 View Post
    The only way I can see that they could manipulate the price is if the "paper" price was different from the "actual" price of the commodity. People actually buy copper for example in manufacturing.
    That actually was the PM market up until relatively recently when physical prices decoupled entirely from paper spot prices, the usual small dealer premiums notwithstanding. The copper market is still a paper market first because it still relies on futures contracts to set the price. Those futures may or may not lead to taking possession of the physical. YMMV but I've concluded that all markets are rigged. It's just that we focus on monetary PMs markets and don't pay attention to commodities markets to identify manipulation there.

    I'm guessing if the spot price was different from the actual price people would be doing that thing where you buy the cheap version and sell the expensive version (I can't remember the term for that).
    Sounds like 'arbitrage' between markets. Or contango/backwardation within the same market.

    Anyway my point is that commodities are not like bitcoin or even tesla where the price has no real relationship with reality.
    I'd argue that "reality" is whatever we're presented with.
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  25. #22
    Quote Originally Posted by Madison320 View Post
    The only way I can see that they could manipulate the price is if the "paper" price was different from the "actual" price of the commodity. People actually buy copper for example in manufacturing. I'm guessing if the spot price was different from the actual price people would be doing that thing where you buy the cheap version and sell the expensive version (I can't remember the term for that). I'm assuming it's like gold where the spot price is near the actual price to buy physical gold.

    Anyway my point is that commodities are not like bitcoin or even tesla where the price has no real relationship with reality.
    Any inefficiency like a difference in the futures market and physical market would get arbed away if transaction coats are sufficiently low.

    At the root of any talk about manipulation in large liquid markets is a fundamental lack of belief in markets and freedom itself. People trade if they believe they stand to benefit. If someone manipulates a market away from fundamental value someone else has an incentive take the opposite. Mises would role in his grave at the Zero Hedge manopulation conspiracy theories.

  26. #23
    Spot price of silver has fluctuated between 27 and 28 this week while the retail cost of a silver eagle is about 41 or 42.00
    Do something Danke

  27. #24
    Quote Originally Posted by Krugminator2 View Post
    Any inefficiency like a difference in the futures market and physical market would get arbed away if transaction coats are sufficiently low.

    At the root of any talk about manipulation in large liquid markets is a fundamental lack of belief in markets and freedom itself. People trade if they believe they stand to benefit. If someone manipulates a market away from fundamental value someone else has an incentive take the opposite. Mises would role in his grave at the Zero Hedge manopulation conspiracy theories.
    Arbitrage, that's the word I was thinking of!



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  29. #25
    Quote Originally Posted by oyarde View Post
    Spot price of silver has fluctuated between 27 and 28 this week while the retail cost of a silver eagle is about 41 or 42.00
    I just checked apmex and you can buy bars for about $34. I don't think the price difference is normally the case, is it? I haven't bought any physical pms in a while but when I did it was about the same as spot. I'm assuming this is a short term thing due to high demand.

  30. #26
    Commodities got hit hard today. Nothing moves in a straight line.

  31. #27
    "He's talkin' to his gut like it's a person!!" -me
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  32. #28
    Quote Originally Posted by Krugminator
    Mises would role in his grave at the Zero Hedge manopulation conspiracy theories.
    Mises would roll in his grave at everything we call "markets" today.

    "Wait, you all allow computers running secret, proprietary software to manage markets and set prices???"

    "You all allow one participant to control 50% of market making -and- they get to have a hedge fund also???"

    "Market participants caught breaking the rules are fined less than the profit they made from breaking the rules and no one ever goes to jail???"

    "The head of rules enforcement agency last worked for the biggest law firm hired to defend rule-breakers against that same agency???"

    Shall I go on?
    Last edited by devil21; 05-13-2021 at 03:25 PM.
    "Let it not be said that we did nothing."-Ron Paul

    "We have set them on the hobby-horse of an idea about the absorption of individuality by the symbolic unit of COLLECTIVISM. They have never yet and they never will have the sense to reflect that this hobby-horse is a manifest violation of the most important law of nature, which has established from the very creation of the world one unit unlike another and precisely for the purpose of instituting individuality."- A Quote From Some Old Book

  33. #29
    Quote Originally Posted by devil21 View Post
    Mises would roll in his grave at everything we call "markets" today.

    "Wait, you all allow computers running secret, proprietary software to manage markets and set prices???"

    "You all allow one participant to control 50% of market making -and- they get to have a hedge fund also???"

    "Market participants caught breaking the rules are fined less than the profit they made from breaking the rules and no one ever goes to jail???"

    "The head of rules enforcement agency last worked for the biggest law firm hired to defend rule-breakers against that same agency???"

    Shall I go on?
    No need to go on. Mises would have no problem with any of that.

    Computers and algorithmic trading are called technological progress. No need to be fearful. They have made markets more efficient and far more fair for the average person. Citadel isn't hurting you and I have no idea why having a hedge fund and a proprietary market making firm under the same company would be a problem.

    The reason three market makers dominate isn't because they are "allowed" any more than Wal-Mart is allowed to have a large market share. It happens because they won the competitive battle. There were dozens if not hundreds of HFT firms just 10 years ago when Zero Hedge started babbling about it. Most went out of business because of competition.

    And almost all financial regulations outside of capital requirements for banks are counterproductive.
    Last edited by Krugminator2; 05-13-2021 at 04:43 PM.

  34. #30
    Quote Originally Posted by Madison320 View Post
    I just checked apmex and you can buy bars for about $34. I don't think the price difference is normally the case, is it? I haven't bought any physical pms in a while but when I did it was about the same as spot. I'm assuming this is a short term thing due to high demand.
    I expect it to last into next yr at least , been this way pretty much since the plague shutdowns started March before last. I think it will be nearly two years into it before there is a chance of a change. Even then i think paper spot will need to rise several dollars or it may stay the same with a permanent decoupling. Even the major coin market dealer wholesale pricing guide ( Grey sheet ) cannot keep up with current trends. Carson City Morgan dollars and About Uncirculated and Uncirculated Morgan dollars cannot be bought at the prices they are listing as what a dealer bids ( AU retail is currently 50). One of the major wholesaler suppliers to dealers on the East coast has been buying GSA Carson City dollars 255 to 315( current) within the past couple weeks , marking them up 10 percent and selling to dealers who will mark them up 10 percent pushing retail to over 380 while the new grey sheet lists them just slightly over 200. Paper pushers are not relevant to me right now. They risk becoming that way also to many others soon I suspect.
    Last edited by oyarde; 05-14-2021 at 09:31 AM.
    Do something Danke

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