Tuesday, January 12, 2010

Commodity Prices Going Up 2010

Commodity prices going up 2010

Commodity prices going up is good for investors, and the trend should continue in general throughout 2010.

The question is why the prices are going up, and how that could impact the investing situation.

For consumers, this will probably be bad news, as well as a number of businesses, because the cost of doing business and inflation puts a damper on spending; both for business and consumers.

As usual China is in the midst of the commodity demand and price surge, and the question is whether the demand is real from the point of view of using the raw materials to build to exports products, or it's a trend to building up commodity reserves in anticipation of huge price increases in the future and to protect its currency from inflation eating up its value.

Some are already heralding this as a part of economic recovery, but I highly question that, as it can't be proven at this time the motivation behind China buying up commodities again.

There are fears the increase in commodity prices could cause Americans to cut back even more on spending in 2010, making any chance of a real economic recovery limited at best. Americans are already paying down debt and saving more, putting less into the economy, and if they have to pay more for gas and food, that will leave even less to spend on other products and services.

The major commodity to be concerned with is oil, although agricultural commodities and industrial commodity prices are rising as well. With recent past experience, if oil continues to rise, it could really wreak havoc on the market, as Americans will continue to be tight with their money and stay close to home.

If that happens, we'll see a continuation of what we've been experiencing over the last several years. Commodity prices are the key to the entire scenario and how it plays out.

Commodity prices going up 2010

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