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BSD
Noted.
However, there resides in this analysis a rather dangerous assumption.
This is, that the transition from subsistance to the consumption that you assume
This does not just happen, overnight, or otherwise.
Jobs that pay enough to raise consumption to those levels is required.
This is a function of wealth, measured by PPP
China
GDP - per capita (PPP):
$6,800 (2005 est.)
Net migration rate:
-0.39 migrant(s)/1,000 population (2006 est.)
US
Net migration rate:
3.18 migrant(s)/1,000 population (2006 est.)
GDP - per capita (PPP):
$41,600 (2005 est.)
So, the figures while on the surface are impressive, under the figures, the PPP tells a rather different story, one of still great poverty, building wealth takes time.
China is a growth story.
China does have an impact.
It is just that the impact has been taken to the extremes as a valuation.
I have read the article, and, it is bullish in its conclusions & implications.
It is only one side of the story.
Speculation, or investment in Commodities was advocated as a rational diversification away from Equity & Bond markets, as the argument went, they were uncorrelated, viz. a low coefficient
Then something went wrong.
The GSCI index shows losses.
Part of the reason is due to the inability to trade a positive roll yield.
The more important reason however resides in the fact that the negative correlation with Equities & Bonds has turned positive.
Commodities in the "90's were pretty neglected by retail investors.
Now they are the hot topic and mainstream via numerous funds.
For example;
Over 5yrs to 2005, the correlation between oil and gold was 0.13It now sits at 0.64
The herd psychology of markets [behavioural finance] explains in part the attraction of retail several years into a bullmarket.
A measure of this speculative excess is the spread between prices of listed commodities and unlisted commodities
It currently sits at an all time record of 60%+
Therefore, although there is a case for commodities, the current climate suggests caution rather than outright plunging.
jog on
d998
Noted.
However, there resides in this analysis a rather dangerous assumption.
This is, that the transition from subsistance to the consumption that you assume
This does not just happen, overnight, or otherwise.
Jobs that pay enough to raise consumption to those levels is required.
This is a function of wealth, measured by PPP
China
GDP - per capita (PPP):
$6,800 (2005 est.)
Net migration rate:
-0.39 migrant(s)/1,000 population (2006 est.)
US
Net migration rate:
3.18 migrant(s)/1,000 population (2006 est.)
GDP - per capita (PPP):
$41,600 (2005 est.)
So, the figures while on the surface are impressive, under the figures, the PPP tells a rather different story, one of still great poverty, building wealth takes time.
China is a growth story.
China does have an impact.
It is just that the impact has been taken to the extremes as a valuation.
I have read the article, and, it is bullish in its conclusions & implications.
It is only one side of the story.
Speculation, or investment in Commodities was advocated as a rational diversification away from Equity & Bond markets, as the argument went, they were uncorrelated, viz. a low coefficient
Then something went wrong.
The GSCI index shows losses.
Part of the reason is due to the inability to trade a positive roll yield.
The more important reason however resides in the fact that the negative correlation with Equities & Bonds has turned positive.
Commodities in the "90's were pretty neglected by retail investors.
Now they are the hot topic and mainstream via numerous funds.
For example;
Over 5yrs to 2005, the correlation between oil and gold was 0.13It now sits at 0.64
The herd psychology of markets [behavioural finance] explains in part the attraction of retail several years into a bullmarket.
A measure of this speculative excess is the spread between prices of listed commodities and unlisted commodities
It currently sits at an all time record of 60%+
Therefore, although there is a case for commodities, the current climate suggests caution rather than outright plunging.
jog on
d998