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This is correct. Three factors drove the bubble in aluminum and other commodities: Increased energy expense, speculative and fraudulent investment, and some inc

by rrggrr 10y ago

This is correct. Three factors drove the bubble in aluminum and other commodities: Increased energy expense, speculative and fraudulent investment, and some increased consumption. However, three factors are likely to continue to drive aluminum and other commodities under the mean: Lack of confidence, spectacular debt burdens and deflationary trends across commodity price inputs. Its likely to be years before a stable mean is established, despite the occasional mirage of stability from month to month.

at-fates-hands 10y ago
I remember working at a bike shop around this time and within 6 months all of our bikes went up in price like $50-100. I had no idea what was going on and asked one of corporate office guys what the deal was. He said between India and China, they had both put huge strains on steel, aluminum and titanium and it was causing a shortage for bike manufacturers, so they were raising their prices since the prices for these metals had skyrocketed in recent months. Good to know it was a little more to it, but interesting nonetheless.
- deleted 10y ago
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joe_the_user 10y ago
Indeed, one of the motivations for speculation has been the continuous (electronic) printing of money by the US and other governments (combined with massive infrastructure projects by China), leading many investors to logically-if-naively believe that commodity prices (especially gold) would follow "real" money. The problem is that all commodities are actually produced and consumed and speculation simply causes disproportionate production followed by a crash. And, of course, there are a number of ways to do speculation in a bear market but altogether, more money is going to be made in a bull market. Even more, since the money coming out of quantitative easing isn't going into consumer goods (that much), it has to go into speculation and it thus seems likely the various kinds of market imbalances will or get worse.

by rrggrr 10y ago

at-fates-hands 10y ago

I remember working at a bike shop around this time and within 6 months all of our bikes went up in price like $50-100. I had no idea what was going on and asked one of corporate office guys what the deal was. He said between India and China, they had both put huge strains on steel, aluminum and titanium and it was causing a shortage for bike manufacturers, so they were raising their prices since the prices for these metals had skyrocketed in recent months. Good to know it was a little more to it, but interesting nonetheless.

deleted 10y ago
[deleted]

joe_the_user 10y ago

Indeed, one of the motivations for speculation has been the continuous (electronic) printing of money by the US and other governments (combined with massive infrastructure projects by China), leading many investors to logically-if-naively believe that commodity prices (especially gold) would follow "real" money. The problem is that all commodities are actually produced and consumed and speculation simply causes disproportionate production followed by a crash. And, of course, there are a number of ways to do speculation in a bear market but altogether, more money is going to be made in a bull market. Even more, since the money coming out of quantitative easing isn't going into consumer goods (that much), it has to go into speculation and it thus seems likely the various kinds of market imbalances will or get worse.