Commodities tipped to collapse

[wayneL]

It is morally bankrupt to sit amongst the wealth (assetwise and healthwise) that the western nations have built up (primarily through consumption of the earth's natural resources) and then to deny other people the opportunity to lift themselves out of poverty.

So IF it is true that further consumption will cause long term damage to the earth, we have two possible 'moral' solutions:

1. Drastically reduce all consumption, and for the rich nations to share thier wealth with poor nations. Because of the population imbalance, this would probably dilute everyones wealth to about 10% of thier current holdings.

2. Do nothing and sort out the problems of earth as they occur.

I think the 2nd option would result in the most efficient allocation of capital and resources.

There is no doubt that humanity will go for option 2

However I contend that the problems will not be sorted out as they occur. e.g. what is being done to address global warming? Effectively, precisely nothing apart from window dressing designed to sooth our conscience.

Rainforests are being pillaged, the ocean is fast becoming a lifeless rubbish tip. etc etc

But it won't be us who pay, it will be our children...well maybe some of you young wipper snappers will still be around.

As far as efficient allocation of capital and resources... What makes you think humanity will change it's extreme wastefulness? There is no evidence that will occur at all!

Eat, drink, be merry, for tomorrow.........

 

[ducati916]

LOL!

He's not using philosophy though, he's just a sophist. There's a difference.

A sophist, no not really.
More a Rational eudemonist that subscribes to Res cogitans.

jog on
d998

 

[rederob]

ducati

A bit earlier in this thread you posted a quote of mine lifted from the gold thread, and used it as a basis for not replying to me.
You took an opportunity to not reply to chops because you reckoned he had quoted out of context, while you have used other tactics in order to not reply respectfully to others (typically the tactic of belittling the person).

Your actions are simply disingenuous, and I trust the moderators note this.

You perhaps are not aware of your own deception - that of deceiving yourself in this case.

If you wish to defer to logic and higher authorities you must be consistent and well intentioned. My view is that you put these aspects aside to pursue more selfish personal agendas.

So as to keep this relatively succinct, I would refer you and readers to the gold thread and its posts early this year (esp. February). We both posted copiously around the time. Although gold was trading in the low $500s and was just setting cycle highs, I stated quite clearly that it would hit $700 some time this year (see post #275 in that thread). Readers can also check out post #268 and note the equity I bought (the only gold equity I bought this year) and check out the price of gold that day (yes, it was the "low" for gold this year).

While you, ducati, may wish to dismiss the idea of replying considerately to me and others, at least you will not be able to diminish my track record (which I will never claim to be perfect) which is open for others to see.

I will continue to espouse my forward view of the markets, and learn from my mistakes. Indeed, I hope that aspect never changes.

 

[ducati916]

rederob

A bit earlier in this thread you posted a quote of mine lifted from the gold thread, and used it as a basis for not replying to me.
You took an opportunity to not reply to chops because you reckoned he had quoted out of context, while you have used other tactics in order to not reply respectfully to others (typically the tactic of belittling the person).

Nonsense.
In respect to chops he referred to analysis via data and he then proceeded to batter me with unadulterated opinion

You, are not quite as bad, but, much of your posting revolves around opinion, and or charts, masquerading as pseudo-analysis.

I posted your quote regarding gold, as it currently is unarguably horribly wrong, and, you owe me a concression of total defeat [albeit in 6wks time]

Originally Posted by rederob
Not asking you to buy gold as I am happy to do that.
But would you like to do another of your detailed analysis so that we can see what range prices for gold we can look forward to over the next year or so?

Or would you prefer a brief history lesson: Recall my challenge to you -


And one of your multitude of sweeping conclusions:

In the light of the fact that gold has breached your preferred upper range of $720 I think it only fair to give you another opportunity to prove yourself. On the other hand, I will concede utter defeat if gold’s “parabola” collapses and by year’s end POG is trading under $800 (which I believe is generous in that my expectation was for gold to be near that level by year’s end, rather than be as “support”).

For the moment, I am hoping for another $50 or greater retrace in gold near term, but will not hold my breath: Corrections in the metals complex as a whole are running to about 3 days instead of 3 weeks or more.

Wayne
I will put you into ducati’s camp. Do you recall an earlier post where you mooted a $500 correction and I replied:

My concluding remark for now is that playing the markets means taking a forward view, and that view can be based on your decision to trade a safe “yield” equity, or a highly speculative futures contract. You enter the trade with a “view”, never a “knowledge”. Posting that “view” can mean a loss or gain of “reputation”, but in the case of ducati, he has my respect for at least trying to work out gold: A little knowledge can be a dangerous thing.

With regards to the charge of;

while you have used other tactics in order to not reply respectfully to others (typically the tactic of belittling the person).

Again, check your facts, very rarely will I belittle a person, if they stay on topic Usually, and this is the case with chops my challenge to provide a reasoned reply to interpretation of data, results in a changing of the topic to a personality based one.

I have no problem accepting this, I also have no problem handing it out.
You don't like it?
Then stay on topic, don't cry like a baby.
I'll debate with anyone based on interpretations of data/facts/theory

If you wish to defer to logic and higher authorities you must be consistent and well intentioned. My view is that you put these aspects aside to pursue more selfish personal agendas.

I'll keep it highbrow, or down in the dirt, irrelevant to me.

While you, ducati, may wish to dismiss the idea of replying considerately to me and others, at least you will not be able to diminish my track record (which I will never claim to be perfect) which is open for others to see.

Really.
Where?

jog on
d998

 

[rederob]

Really.
Where?
jog on
d998

I guess there are some things that you will never see, ducati.
I have no interest in responding to your side tracks and irrelevances in this thread as it diminishes its value.
If you wish to simply and clearly state your position on the theme, please do so.
I am sure other readers are clear where I stand, and how I apply my knowledge of the markets to my trading decisions.

 

[Dr Doom]

Another issue to contend with in the context of a possible global slowdown is the reason all of this is happening in the first place ie excess global liquidity. Just as a 'developed' nation as the USA is supposedly in debt up to the eyeballs, so too has China's financial foundations been built on dubious financing infrastructure, with little room for error or reduction in demand for their goods. All the while Japan continues to be the lender of last resort able and willing to supply essentially free money to whoever wants it. The problem being that this money isn't going into productive areas, rather it is fueling bubbles globally, the biggest of which (the US housing market, is about pop spectacularly.
This quarters US GDP figures will be watched closely for a continuation of the dramatic falls so far in the last three quarters. Soft landing, I don't think so.

 

[noirua]

Another issue to contend with in the context of a possible global slowdown is the reason all of this is happening in the first place ie excess global liquidity. Just as a 'developed' nation as the USA is supposedly in debt up to the eyeballs, so too has China's financial foundations been built on dubious financing infrastructure, with little room for error or reduction in demand for their goods. All the while Japan continues to be the lender of last resort able and willing to supply essentially free money to whoever wants it. The problem being that this money isn't going into productive areas, rather it is fueling bubbles globally, the biggest of which (the US housing market, is about pop spectacularly.
This quarters US GDP figures will be watched closely for a continuation of the dramatic falls so far in the last three quarters. Soft landing, I don't think so.

One popular notion is that shares rise when the property market slides. That seems to be the case in Australia and the USA. Some European property markets boom on and a few markets experiencing a property slide seem to be the exceptions, time will tell as always.

 

[Sean K]

The problem being that this money isn't going into productive areas, rather it is fueling bubbles globally, the biggest of which (the US housing market, is about pop spectacularly.
This quarters US GDP figures will be watched closely for a continuation of the dramatic falls so far in the last three quarters. Soft landing, I don't think so.

I'm starting to think hard landing here too. I think a reduction in interest rates could even be on the cards soon, but this of course will create other problems. Perhaps they'll have the housing crash they have to have, just as part of the 'normal' economic cycle.

 

[YOUNG_TRADER]

I'm starting to think hard landing here too. I think a reduction in interest rates could even be on the cards soon, but this of course will create other problems. Perhaps they'll have the housing crash they have to have, just as part of the 'normal' economic cycle.

I think (hope) that late 07/08 Equity/Share Markets locally ie ASX won't offer much more value and we will see a graduall shift back to property which in Melb would have been stagnant in most parts since 2003, ie 5 years by then

Else my first property project will break me

 

[noirua]

My forecast is for the ASX 200 to continue on up for several more years yet and perhaps peak at around 8,000 by 2009. Commodities may well fall in price in the next few years, but quantities produced will rise even more steeply. Inflation will fall gradually and also interest rates.

All this is guaranteed to come to pass, UNLESS I'm wrong.

Joking aside, I remain very confident about the direction of Australia and its position in the expansion of Asia and the Far East.

 

[Smurf1976]

I'm starting to think hard landing here too. I think a reduction in interest rates could even be on the cards soon, but this of course will create other problems. Perhaps they'll have the housing crash they have to have, just as part of the 'normal' economic cycle.

House price crashes (real or nominal) historically lead to recession. I can't see why this time would be different so a general slowdown could well be on the way.

 

[ducati916]

I guess there are some things that you will never see, ducati.
I have no interest in responding to your side tracks and irrelevances in this thread as it diminishes its value.
If you wish to simply and clearly state your position on the theme, please do so.
I am sure other readers are clear where I stand, and how I apply my knowledge of the markets to my trading decisions.

That's fine.
Don't respond to my posts, entirely your perogative.
Here are some more of your gems from gold;

RichKid
If you have evidence to the contrary I would welcome a debate.
The fact is that every time anyone posts a forward view it is likely to be wrong.
The more into the future that view, the more likely it will be wrong.
2 months ago gold was about $500 and today it is almost $70 higher. Extrapolating this rate of increase gives us gold at about $900 by the end of 2006. But that is ramping!
4 months ago gold was about $100 less than today, so that only gives us gold at around $850 by year's end.
6 months ago gold was about $130 less than today, giving us a gold price over $800 by year's end.
The questions all investors need to ask is if the past 6 months represent the prevailing trend, the past 4, the past 2, or none of the above.
The undeniable fact is that on "recent" trend there is absolutely nothing stopping gold being over $800 by the end of this year.
Accordingly, my suggestion/statement/forecast that gold would be $850 some time in 2007 is extremely conservative.
By the way, if you believe it unlikely that such a strong trend could eventuate for gold in 12 months, ask why copper rose well over 50 in price last year alone - in defiance of almost every specialist metals forecaster in the previous year.
If you want more "quality" I will return and dazzle with more correlations and extrapolations based on actual historical relationships between gold and a range of other commodities and indexes. Unfortunately some of these suggest gold will be well over $3000 but I am not so sure!

This rather lends to the lie, it would seem that in truth you don't actually want debate after all, especially when it makes you look like a peanut.

Wayne
Yes, as folk take to skinning cats I will hunt them down and report them to the RSPCA!
I am more worried about the "pussy footing around" that's happening.
Every time I look at the thread heading, I am giving my perspective and accept the consequences.
But in posting bullishly I am hoping to entice out a bear that will bring me back to earth.
There is no point holding a bullish perspective if there is bad or contrary news around. I do not want to be that blinkered racehorse that has crossed the finishing line so wide of the mark that “I can see I have won”, but in reality was beaten by every other thoroughbred on course.

Is this an example of your track record?

I will be looking to buy more gold equities in late afternoon if gold holds during Asian trading, and have another crack at the markets tomorrow.
Usually only a few "sales" present themselves each year - this one is truly excellent.

Or this?

hope you are right.
I have a low-priced bid on LHG shares as I regard them as the best valued gold equities in our markets at the moment.

Looks like you have cracked, the heat in the kitchen and all that;

ducati
You seem to have no understanding of intrinsic value from a market perspective or a theoretical perspective.
In the fullness of time you will choose to ignore me.

Here we are, your portfolio, called in, hindsight time, strange how hindsight portfolios always seem to perform so well, must try and get one of those myself.

While that may be true for ducati it does not explain why my rather meagre portfolio is over $100k up in 6 months, and I have made the grand total of a dozen trades in that period (mostly buys) all based on what I regard as "fundamental trading".

Seems to be a bit of an echo on this thread, my position on gold, commodities in general would be fairly obvious to all but the most challenged of readers surely?

If ducati wants to make an "on topic" contribution to the thread he will need to indicate where his view of the "speculative" outcome finally lies, or at least he needs to give a clear view of gold's price going forward in the medium to longer term.

jog on
d998

 

[ducati916]

If you feel that the real estate bust is a possibility, you are unsure about commodities, there are some bullish commentators for equities;

Brian Reynolds, the chief market strategist at the boutique brokerage M.S. Howells in New York, sees the disconnect between corporations and average investors as the difference between believers and nonbelievers. Federal Reserve flow-of-funds data, he says, show that individuals have been selling equities the past three years as heavily as they did during the bear market while buyers on the other side of those transactions have mostly been the companies themselves who are repurchasing stock and going private.

Essentially, Reynolds noted, corporate bond investors are valuing companies' earnings as if they are going to grow for years to come, while individuals seem to think there's a depression coming. That Freescale deal is again a great example. At the time the buyout was announced, the stock was one of the most heavily shorted on the New York Stock Exchange, and bears decried the price offered as insane. Yet the bonds issued to pay for the transaction were oversubscribed by a factor of three.

"It's the exact opposite of 2000 and 2001, when it was corporate bond investors that were pessimistic and the public was optimistic," Reynolds said.
The veteran strategist says the last time he can remember this wide a gulf between smart money and the public was in late 1994 and early 1995 at the start of a five-year ascent for stocks. It's a matter of mistaken perceptions in some cases. For instance, many investors are leery of stocks due to a concern that a real-estate crash may crush stocks. But it doesn't work that way. Reynolds pointed out that in the last real-estate crash, from 1988 to 1993, 750 thrifts went bankrupt and the government created the Resolution Trust Corp. to sell real estate at pennies on the dollar. Yet the Standard & Poor's 500 Index ($INX) doubled in that period, as investors paradoxically came to consider the stock market a haven.

Phil Erlanger, an expert on investor sentiment and the publisher of the Erlanger Research Web site, said he thinks the current rally is sustainable because it has been a low-volatility advance -- not a screaming, one-sided race. "I haven't seen any kind of froth at all," he told me from his office in Boston. "We've seen nice, tight uptrend with no superstrong one-day moves. You can tell that there are lot of people still waiting to get in; they're paralyzed."

Charles Biderman, another veteran observer who publishes institutional research on market liquidity called TrimTabs, said the most bullish effect at work today is companies' efforts to reduce the number of outstanding shares for sale in the market at an annualized rate of 3%. A "float shrink" of this size is unprecedented, he said. The only faintly similar episode came in late 1994 through 1995, with share shrinkage of a bit more than 1%. Stocks went on to advance 33% in 1995 and 25% in 1996. He advises clients to align themselves with the corporate "smart money" and get fully invested now in exchange-traded funds tracking small-cap and large-cap indexes.

Bert Dohmen, a seasoned investor and research publisher in Los Angeles, noted that the big buyouts have done two things that benefit all investors: They take supply off the market and release more money back into the target's sector. Once this week's Equity Office Properties (EOP, news, msgs) deal is completed, for instance, most of its former shareholders will redeploy their money into other real-estate investment trusts, buoying their prices.

The bottom line, said Dohmen, is that there's a lot of money sloshing around the world economy, from tripled oil prices in the Middle East to windfall manufacturing profits in Asia. All that money needs to find a good home, and right now, billions of it is pouring into stocks. So no matter how much you may fear the economy is bound to slow or that the consumer is tapped out, or that Congress will overspend, or that North Korea will blow up the world, you need to realize that liquidity -- the fancy word for rivers of cash -- conquers all. "Sometimes you just need to pretend you're dumb and not look too closely at all the details," Dohmen said. "Just admit you don't know everything and go with the flow."

jog on
d998

 

[Kauri]

Love it...

"Just admit you don't know everything and go with the flow."

jog on
d998

 

[chops_a_must]

A sophist, no not really.
More a Rational eudemonist that subscribes to Res cogitans.

jog on
d998

LOL!

It just keeps getting funnier.

What a pity that your philosophy would not have survived Kant.

 

[chops_a_must]

In respect to chops he referred to analysis via data and he then proceeded to batter me with unadulterated opinion

I referred to it. Doesn't mean I can be bothered getting my books out to give information to people that wont even read it properly anyway.

I never stated a hard opinion, you just assigned me one. And then when I did point out commodities that were running contrary to your opinion, the goal posts shifted. That looks like Sophism if ever I've seen it.

And if you are that interested, you can find similar information to what I have very easily on the net. A recent interview with Paul Keating on China gives a very good overview of the sort of stuff that I have read.

 

[Prime]

My forecast is for the ASX 200 to continue on up for several more years yet and perhaps peak at around 8,000 by 2009. ...

All this is guaranteed to come to pass, UNLESS I'm wrong.

Joking aside, I remain very confident about the direction of Australia and its position in the expansion of Asia and the Far East.

I'm also quite confident about the Aussie bourse ... I'd never considered a pt value though ...

8000 sounds good ... when is anyones guess.

Incidently I've been reading a book called "China Inc" by Ted C Fisherman. (veteran journalist and former commodities floor trader and member of the Chicago Mecantile Exchange)

Describes a lot about China and its hunger for commodities and resources. It's an interesting read and eludes to continuing growth for the next decade or two at least. All of which bodes well for Australia ... provided we can supply!

 

[ducati916]

chops

I referred to it. Doesn't mean I can be bothered getting my books out to give information to people that wont even read it properly anyway.

Same old excuses.
I know the answer, but I have to keep it secret, yada, yada, people won't read/understand, yada, yada.

I never stated a hard opinion, you just assigned me one. And then when I did point out commodities that were running contrary to your opinion, the goal posts shifted. That looks like Sophism if ever I've seen it.

Did you not?
Interesting, what then exactly would you call this?

I don't know dood. All the town planning stuff I've done seems to say otherwise. I am dead set against you here. Your opinions seem to fly in the face of all the data that I have.

What data?
My opinions, are backed by data.
You may disagree with my interpretation or analysis, however, the numbers are provided so that you can run your own calculations if you wish.

On, or around October 17 2006, the US population hit 300 million.
This is an increase of 100 million from 1967
At this growth rate, the US population will hit 400 million circa 2047


How calculated?
Through fertility rates;
US = 2.1
Spain = 1.28
EU = 1.47
Hong Kong = 0.98
China = 1.7

Based on the replacement rate, the population of China will reduce by almost half [50%] over the next 42yrs.

Immigration, is an alternative to *growing* your population, so, what are the figures for immigration into China?
Unsurprisingly, they are so low as to be almost insignificant.
The US has a number of migration issues, and very long waiting lists for legal immigration.

Therefore, contrary to the general opinion, the numbers do not support currently the premise put forward by your dealer.
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.)

For example;
Over 5yrs to 2005, the correlation between oil and gold was 0.13 It 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%+

Irrespective of GDP and overall demand, rapid industrialisation creates huge demand pressures on resources. An already industrialised nation like the US will have a relatively low impact on prices, because either way in demand, it is mostly steady in comparison to one that is becoming rapidly modernised.

Take testosterone levels in males. One can have a huge amount of testosterone, but if the levels are steady, then testosterone linked behaviours are limited. Compared to someone who has them swinging all over the place.

The point is, it is not about overall demand, it is about the rate of movement within the demand. Already industrialised nations have relatively low swings, developing nations do not.

Oh, that data.
Looks remarkably like opinion.

And if you are that interested, you can find similar information to what I have very easily on the net. A recent interview with Paul Keating on China gives a very good overview of the sort of stuff that I have read.

Not really, I'm interested in data [numbers] and calculating from the data my own figures.............not really interested in yet more opinion.

jog on
d998

 

[chops_a_must]

Yes. A billion people involved in rapid industrialisation, modernisation and middle class expansion, the likes of which we have never seen in history, is just pure opinion. It has no basis on anything.

And for the record, the Chinese are reducing the numbers of people in their society that they deem as unproductive. Not in the sectors that they need for rapid expansion.

 

[ducati916]

Yes. A billion people involved in rapid industrialisation, modernisation and middle class expansion, the likes of which we have never seen in history, is just pure opinion. It has no basis on anything.

And for the record, the Chinese are reducing the numbers of people in their society that they deem as unproductive. Not in the sectors that they need for rapid expansion.

Really.
Is that data...........or opinion?

Let's have a look at some data......you know, numbers.

Labor force - by occupation:
agriculture: 49%
industry: 22%
services: 29% (2005 est.)

Unemployment rate:
9% official registered unemployment in urban areas in 2004; substantial unemployment and underemployment in rural areas; an official Chinese journal estimated overall unemployment (including rural areas) for 2003 at 20% (2005 est.)

Oil - production:
3.504 million bbl/day (2004)
Oil - consumption:
6.391 million bbl/day (2004)
Oil - exports:
340,300 bbl/day (2004)
Oil - imports:
3.226 million bbl/day (2004)

Exports:
$752.2 billion f.o.b. (2005 est.)
Exports - commodities:
machinery and equipment, plastics, optical and medical equipment, iron and steel
Exports - partners:
US 21.4%, Hong Kong 16.3%, Japan 11%, South Korea 4.6%, Germany 4.3% (2005)

So from the numbers, [you can go first] what conclusions do you draw?
For the second part of your assertion, viz. the death rate, or the reduction of non-productive population, are these numbers supporting, or contradicting your assertion?

Death rate:
6.97 deaths/1,000 population (2006 est.)

Net migration rate:
-0.39 migrant(s)/1,000 population (2006 est.)

Sex ratio:
at birth: 1.12 male(s)/female
under 15 years: 1.13 male(s)/female
15-64 years: 1.06 male(s)/female
65 years and over: 0.91 male(s)/female
total population: 1.06 male(s)/female (2006 est.)

Infant mortality rate:
total: 23.12 deaths/1,000 live births
male: 20.6 deaths/1,000 live births
female: 25.94 deaths/1,000 live births (2006 est.)
Life expectancy at birth:

total population: 72.58 years
male: 70.89 years
female: 74.46 years (2006 est.)

Total fertility rate:
1.73 children born/woman (2006 est.)

HIV/AIDS - adult prevalence rate:
0.1% (2003 est.)
HIV/AIDS - people living with HIV/AIDS:
840,000 (2003 est.)

HIV/AIDS - deaths:
44,000 (2003 est.)

jog on
d998