Wednesday, December 9, 2009

Is Commodity Correction Here?

With many investors and commodity speculators believing there was an economic recovery at hand, many pushed up the prices of numerous commodities pricing in the expected increase in demand which hasn't materialized, as all indications are the so-called recovery is a false one, and it could be a long time before significant demand emerges.

That shouldn't dampen the spirits of commodity investors though, as the unending printing of money by governments around the world will also drive up the price of commodities, something that history has proven is a predictable event.

Even so, the misguided belief we're in a recovery could very well result in a temporary correction in commodities, especially if investors don't take into account the inflation factor which is the consequence of out-of-control money printing presses.

Commodities like crude oil and natural gas have fallen based on demand issues, while gold have dropped from the temporary resurgence of the U.S. dollar, which won't last too long, although there could be a jump in strength in the dollar based on how bearish everyone is on it.

Copper also recently fell in price, but that was mostly from profit-taking rather than decreased demand, as copper prices had made a nice upward move.

I think there will be a commodity correction, but we can't interpret that in any other way than that. Once that happens, commodity prices will continue their ascent, and continue with its ongoing bull market behavior.

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