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Did The Bottom Just Fall Out Of Commodities?
Global growth expectations... we have a problem. With all eyes focused on BABA, Treasury yields, and Russell 2000 death-crosses, the old equally-weighted CRB commodity index has broken down through support to 4-year lows this morning...
Commodities have slipped notably since confirming their own death cross in August.
Chart: Bloomberg
h/t Brad Wishak at NewEdge
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Deflation bitchez! Need moar printing.
last call for muppets ...
Are commodity prices "telling the truth" about the real state of things?
I'm not willing to accept that premise just yet. But I probably should.
When control issuance of currency, power to manipulate prices is almost infinite until final collapse. Then cannot hide from truth. Just remember, bankster class always is holding "war" trump card and then it is not matter what value of anything in desolate battlefield wasteland. Just ask Ukrainian about nice garden that is now trample under foot of foreign mercenary.
No worries TPTB don't report deflation Or inflation in CPI
ITS ALL GOOD
They certainly took silver out back and kicked its ass with a big stick. Hell, they may have even stolen my AK47 and shot silver in the back a couple of times. So, silver is on sale. I'm hoping to find the physical stuff over the weekend and to stock up.
Silver is thought of as a commodity, but it is really a monetary metal that people happen to shit on and use up for industrial purposes. And there will be people really sorry they did this in a short while. Hi Ho, Silver!!!
Man alive, I just bought some silver, guess now I'm gonna have to buy somemore ....
It'll get cheaper. Here's one reason why.
http://www.nowandfutures.com/images/cot/SI.png
Too many specs. are long. It'll take another few weeks. TPTB are hammering it ahead of Taper's end. This may be the last really good buy for decades.
WTF!!! This isn't a monkey hammering today it's an effing gorilla hammering.
The hair on the back of my knuckles is standing up. Something big is in the works!!!
Hey Boris, Check out "First Squad". Russian anime...and not bad too... ;-D
trust The Force, NoDebt
Can I finally throw away my WIN button that Gerald Ford gave me.
MISSION ACCOMPLISHED GERALD......GERALD?!
The bottom fell out years ago.
I'm personally not so sure that's what this move represents (yet).
Or did everyone forget about all the extra food inventory Europe suddenly finds itself with? I certainly didn't when I bit into a nice browned on the inside apple yesterday. Apparently they're trying to pass the old food back onto us. Fairly confident the sudden oversupply from Europe is definitely affecting the food commodity prices.
Although I should say oil's breakdown is quite interesting.
Hmmmm. Money printing is supposed to cause massive inflation as per ZH. We see article after article showing the "cost of living" supposedly skyrocketing under the surface which supposedly proves the "farse" that is government data.
Commodities, a gauge for inflation, is collapsing. Where are the articles showing maybe ZH thesis for massive inflation was wrong?
Use dropping commodities to prove the global expansion is not there, ok...... but why not use them also to prove they missed it completely on the money-printing monetary theory for a collapse from all the supposed "printing"?
Can't have it both ways......
right ... still thinking ehhhh ..... thats bad for your health...
Deflation because people can't afford stuff. Too much in debt, prices go down. In that way, the debts, including .gov debts, cannot be serviced anymore, so the printers will have to be turned on once again. First deflation, than (hyper)inflation. I've read that many times, and the facts still support that imho.
The facts, at this point, don't support the deflation-then-hyperinflation scenario.
You may be proven correct later, but you're wrong, now.
Paging Eric Janszen, Eric Janszen?!
price discovery? Priced in what exactly? Seems to me a lot of folks want to have it both ways.
Yes, they do SR. Higher prices are just a temporary phenomenon, a blip. Because companies need higher prices. Can't afford that. Major movement is going down. Just like stock buybacks, it's a temporary logical blip.
Major movements will be, killing deflation, logically followed by killing inflation. Because of 'interventions', timelines are streched also.
Hyperinflation is a function of foreigners losing faith. This will take a major change in the Mid. East since most of the world is hitched to the dollar.
This is not normal price movement, it reeks of manipulation. There is something horrible going on behind the scenes but we don't know it yet.
Yea, we do. Shanghai silver stocks are at new lows. If they don't kill demand here, they may lose control.
http://blog.milesfranklin.com/wp-content/upLoads/2014/09/Shanghai-Future...
"Commodities, a gauge for inflation, is collapsing." --
Are you suggesting that there is a market for true price discovery?
Can't have it both ways indeed.
As a commodities trader, I must point out one error in the premise of your reasoning. Let's call it a non-sequitur. Commodity prices represent WHOLESALE prices. They are the the "cost of goods sold" -- the input costs -- for producers that buy commodities to use in their products. At the retail level, prices are still rising. Lower commodity prices are likely padding corporate profits, but they aren't aiding the poor and middles classes, who are still noticing rising prices at the retail level. The falling prices of commodities are an indicator of true demand -- or in this case, the lack thereof. They are an ill omen for the true health of the economy, and the slack demand for the input ingredients for all the "stuff" people buy. I use the general rise or fall of commodity prices as a barometer -- an indicator -- of the health of the real economy. It's not well, not well at all!
Good post. I will only add that there are in fact certain "things" or "stuff" (and hence commodities) that people must purchase, directly or indirectly. None of us will complain if our purchasing power goes further in that regard.
The problem for the cronies and their political puppets is how to explain the market at "all time highs" with interest rates at "all time lows", especially in light of the "recovery" meme.
In the not so distant future behold the historical achievement of central banks: 40% unemployment and rising, those still employed cannot afford the basics, war looming, separatist movements across the world, society crumbling and S&P at 50,000 and rising. Tyhe times we are living in will become the stuff of legends.
In decades from now, people (assuming there are any left) will tell tales about what it was like and how it lead to the new stone age they will be living in.
True about demand but the increasing dollar is also forcing lower commodity prices. They are inverse of one another.
Actually, with Central Banks printing to infinity, you can have it both ways...........but only for a very, very limited time.......and then the herd turns with abandon!
Do you go shopping for groceries?
A pound of apples is 4x the price it was a couple years ago.
Among many other things ... including pet food.
Do you eat?
The next move to the upside could be shocking.
Is no problem! Boris is frequently hit "live" copper during subterranean extraction operation. Just is careful for wearing of thick leather glove and quality rubber boot.
Yes, I'd argue that the chart above clearly shows that the prices only come down when central banks start manipulating prices, which they have been doing since 2008.
Just remember, as long as citizenry has pot for urination, central bankster is can continue regime of price manipulation and asset confiscation through ponzi scheme of repeated divide and skim.
TIme to find a nice desert island and form our own banana republic... Can't screw it up any worse than the capitalist and communists...
Capitalists, what capitalists? We have corruptocrats and cronies. There aren't any capitalists anymore (at least none that may be seen on TV).
Boris, who needs a pot with all the trees around tent city?
Woman folk.
double bubble bust on corn, wheat beans. trouble in farmland
http://futures.tradingcharts.com/chart/CN/M?anticache=1411150669
>> trouble in farmland
Gives me some comfort in knowing corporate farming is taking it in the poop chute. I'm not happy about the small timers taking it on the chin, but how many are there of those, really?
'corporate farming is taking it in the poop chute.'
Don't look now but that's your chute. They'll get a bailout.... I mean stabilization.
Exhibit -
USDA to buy $13M in Alaska salmon Sale will help stabilize market surplushttp://juneauempire.com/local/2014-09-03/usda-buy-13m-alaska-salmon
Doesn't surprise me about the dumping of all that Fukushima contaminated seafood on the poor!
If anyone at a university can run an assay on a can of any seafood from there it would be interesting to see the results.
Note:Let your friends know to eliminate ocean source foods due to Japan's continuous dumping since 2011 see enenews.com
Deflation alright
and they will probably "print" more at some point
little do they realize ... QE IS the source of disinflation (leading to deflation when asset bubble pops)
it will be years before the textbook writers figure this out
bullshit, they know exactly what they (I assume you mean the ivy-league academic fucks and central bankers) are doing. It is, and has always been about maintaining power and control over real resources (including the human kind). This is done by transferring real wealth into the hands of a relative few. Working perfectly...
they have no clue what they are doing.
proof?
They WANT inflation
but their policies are
DISINFLATIONARY/DEFLATIONARY
No, they want ownership/title. Stop believing their bullshit.
try to stay focused
the topic is inflation vs deflation
my side?
DXY 6 year high
CRB 4 year low
your side?????
Have been going to cash and some bonds for the last four months and will keep doing so for a bit longer.
I will be happy to start buying into the right energy/tech companies momentarily. And yes, have been buying puts as well.
We seem range-bound in many ways/sectors...
we all know the economy is sick, once I see real solutions, I have more than enough fiat (of many varieties) to play in a number of markets...
it's a global market with many opportunies on the horizan...
we also farm 35,000+ acre and everyone wants to eat.
That's alot of dirt! How do you not go insane with the price fluctuations.
By the way, I'm sure farm diesel is getting a whole lot cheaper now as well. I'm holding my breath and getting blue in the face...
I will, in fact, take a brake on diesel anyday, and we can store a lot. Go ahead bring prices back to where they were ten years age, I dare you. Watch as no one will be able to take delivery...
Boris is predict Central Bank fallacy is remain uncover until after Global Climate Change is reveal for true hoax.
Temporary deflation will simply preceed the crack up boom. Then........REAL deflation
Max central bank QE worldwide results in zero lending because there is too much debt and zero GDP growth , zero lending, and a collapse in China and EU. 500 SPX and 30 DJIA stocks (mainly AAPL, MSFT, mega banks, and mega healthcare) hide the near depression in many stocks. Go abba
Yep, deflation it is. There's a pretty surprising amount of correlation between that chart and M2 velocity, I noticed. Not sure which is leading, but it doesn't matter, both are dumping, even with printing.
Things are looking ugly.
My feeling also.I'm keeping my powder dry, tempting though the PM price is.
Hell, I keep losing the damn stuff in unfortunate accidents anyway, so
why buy replacements ?.
I'm in the same boat. I'd love to average the cost of my silver down since one of my buys top-ticked the market, but I don't trust anything at the moment. Im hoping AU bounces off the support in the low 1200s but in this insane world, there are no guarantees.
This story dovetails nicely with the speculation that something's about to break in the other thread.
I wonder if part of this commodity weakness could be a bank or banks clearing out positions due to distress?
I have never had any trouble exchanging some PMs for the fruit of someone else's labor.
The velocity of money is a big concern only so long as your trade partners accept it. If they don't, you better have something else to offer them in exchange.
Hey Winston,
Who cares about the velocity of a dead fiat currency?
...in the meantime people seem to be still accepting those paper promises in exchange for the friuts of their labor...
Long cast iron, mason jars, hugel mounds, orchards, hugging my kids and savoring each day like it could be my last on earth...
finally, someone with sense
you are correct to pay attention to velocity of money and not "printing" nonsense voiced here ad nauseam
Yes, but only so long as that "money" is still accepted by your trade partners.
No one gives a shit about the velocity of dead currencies.
at the end of the day
the usd is the cleanest shirt in the hamper
euro?
yen?
yuan?
ruble?
you REALLY want to hold one of them? I see major (read: worse than US) problems in all. Besides, to be a reserve currency need to be willing to run deficits ... japan & china still mercantile
Oil, PMs, commodities will quickly become their own money.
It's already happening. Basically, if your tribe/country doesn't have any of these things to back your paper, you are fucked. We are in a transitory period, again. There is no price discovery, but have faith, these things will eventually re-price.
Moral hazard is a bitch like that.
Maybe, but who alive today will live to see this?
He's right. The rise and fall of commodities is simply the rise/fall of dxy. Right now, japan and some eu countries are in worse trouble, so the dollar is up vs their paper. That's it. Don't waste time complicating things or making up stories to fit your narative.
Until Japan and most of the eu "go Greece", the usd will continue to be the home for scared money. After that fund flows can return there and we are fucked. How long will that take? Decades, if you consider Greece itself is still getting bailouts.
The way you learn a currency is dead is when V=0.
What's interesting is we're looking at the USD dying. The big question is does V rocket into oblivion (hyperinflation) prior to reset, or does it just coast to zero with a locked up economy. I noted the other day those were a couple of the Fed's exit options, and while I think we're in the hyperinflation camp and that this deflation is just part of the program, I can't help but wonder if they don't have another trick up their sleeves.
Because nothing spells "escape velocity" like a plunging CRB.
That doesn't mean anything in a floating currency world. Dollar up, commodities down. It's that simple.
As a debtor nation, a stronger dollar is VERY WELCOME. Bankers hate it. Exporters hate it -- the few left standing after decades of outsourcing. But consumers should love it. Lower gas prices. Lower prices for imported goods.
It's good news, and probably means better times in the coming quarters.
china's housing bust might lead to global deflation.
gold and silver are on sale! Stock up!
>> on sale!
Yeah, it reminds me of those places who have going out of business signs up in the windows so long they've faded to almost unreadable. It's been on sale for over three years now, save your breath.
What this means is that your FIAT paper has gone up in value! How often does that happen and for how long? Take advantage of the Dollar PUMP and DUMP and do what all the governments and estute investors do,"Buy low, sell high". PM's low, Fiat Dollars High." Which do you want to hold for the next ten years?
After things go down, they go up. We're interested in the future; not the present.
a President, a Jihadist and a Wall Street Banker walk into a Gay Bar...
"Dicks, pussies and assholes...
...and the gay bartender says, "Get the fuck outta here."
or you could say... a Muslim, a Muslim and a Jew walk into a Gay bar..
.
Growth aside, there is plenty of demand for calories and commodities in order to simply maintain a high standard of living.
Now, if you want to go live in a box and eat shit, that's another thing altogether.
There is always demand.
This is especially so when it comes to credit....
Credit is not edible.
There is no credit or reserves without COLLATERAL.
Collateral = real stuff (not USTs)
Ponzi's don't give a shit about the literal definition of economic terms. Theft is theft - period.
The ponzi goes on as long as it can keep fooling the masses.
Military needs to get paid with GOODS AND SERVICES, not electrons and digits on computers
Agreed. But as long as the digital manipulated funny money can buy enough corn, beans and wheat for the masses then there's no issue.
We do see however that real food prices are going thru the roof. The synthetic cancer causing shit is cheap because China has more lead based toxic soup than they know what to do with. So it gets processed into some made-up derivative shit that the FDA doesn't know yet and it ends up in your food.
World is reducing output and supplies of anything due to Quantitative Easing, hence higher COST OF DOING BUSINESS, hence miserable economy
"Demand" is only meaningful relative to what you can afford.
Exactly
which why this going to blow all to hell when (uncreditworthy) subprime lending collapses due to spiking delinquencies.
Welp so much for silver arggggg
There are billions and billions of crude oil barrels, thousands of tons of aluminum, iron ore, copper etc etc etc in onshore and offshore storages around the world, used as collateral for derivatives by bank lobby and NOT available for consumption
Like this Saudis would lose control of oil price, giving it to banks which would handle storage and its pricing via derivatives
Saudis/Pentagon make and saudis/pentagon break
And pentagonsaudis always win
Bank lobby will be dead soon
bank lobby is pentagon/saudi
who puts DC in charge? the bankers
who runs pentagon? DC
saudis are a means to an end getting rich in the process
No.
The most violent party which has a lot of guns and ready to use them, is the party that rules.
A violent Military always rules. They need housing, food, services etc.
If they are not satisfied with being paid with REAL GOODS AND SERVICES, not electrons on computers, there is a problem. They get angry and do violent stuff
Disagree - as a banker, you buy the upper echelon, and control the rank and file through modern propaganda and intimidation. And that's not my theory, that's what I see happening.
it is the opposite.
Elite tries to win military loyalty via higher salaries
This is world history. Oligarchs who had military loyalty killed all competition.
Case in point:
Putin killed oligarchs and expropriated them
Local oligarchs, not the international elite. There's a difference.
All elite is local
No such thing as international elite
Elite is always in civil war with other elite to control world assets.
They rarely and very termporarily agree on anything
If only the upper echelon actually did the work...
"rank and file" can get away from you pretty quickly, especially when they can't feed their familes with their wages. That's what I am seeing.
Then you send them to Iraq or Afghanistan or Liberia (or to jail, if they think about whistle blowing).
then you lose even more credibility...
Look at what is enlisting these days. Please, all economies are local, always have been.
Maybe in Russia which is why the military industrial complex put their top dog in the Kremlin.
Obama eliminted a bunch of top brass that could have made his life uncomfortable.
All top brass fired is back now on high demand in the media
Totally agree. The military takes its orders from the CFR, Bilderbergs, etc. EG - the banker crowd.
then why didn't they carpet bomb Assad when the bankerpresident wanted to right after Benghazi? because "the people" said no? was it because the military knew that Russia wouldn't sit for it, remember the naval postering around Syria at the time? so then the banksters created the Ukraine crisis to distract Russia and created ISIS to give them a backdoor into Syria. we'll see who wins out from here. if full military action is enacted against ISIS/Syria....the banksters won.
Well, they have controled the bulk of the black, gooey stuff in the ground for the last 60 years too...
such the optimist.
But yes, the actual producers of physcial things of real value have been getting tired of getting fucked over by useless paper-pushing middlemen.
CAT knockoffs sold in the hundreds. Soon the real housewives of Ferguson, MO can expect their BABA shipment of loaders and diggers.
It's a great world out there!
A perfect day to sell physical Au and Ag to Apmex
/sarcasm
Long KY Jelly.
yeah who needs real stuff required to live...
who needs that which has been money for 5,000 years..
all u need is a new Iphone and some ali baba...
fucking stupid....
fuck off..
Lesson number one, the markets always right
Lesson number two, yes you are stupid I see you've learned that one well.
i up'd u just cause apparently u r so well off u have the spare time to come out somebody's ass to say nothing...
u the man...
so now go fuck off...
silver hit $17.76...I'm taking it as a sign
Below production cost at this point... Something has got to give... Fantasy is about to meet reality up close and personal...
But if you can borrow from the FED at 0% then you can operate that mine at a loss. Whale & Squid have loaded these guys up with forward contracts and cheap financing so that they don't have a choice but continue to mine.
I wish I beleived that $17 and change was the low for silver but the derivatives market drives everything now and until it blows or is barricaded I will sit on the sidelines.
I also don't think we have seen the 'monthly' low yet - may take a few more months.
shut it down...
You might want to wait. This looks like a trend.
U.S. Dollar strength does NOT equal lower commodity prices across the board. Weakening DEMAND is causing the drop and if demand is weakening, EVERYTHING (except bonds) should be deflating, INCLUDING that Ponzi-ficated U.S. stock market...
It is a lagging indicator to the real situation just like in 2007.
When stocks catch down to everything else, it is going to be the funniest thing ever. I will replay that Fleckenstein interview from yesterday and have a moment of hilarity.
Prove it.
Show us where consumer spending is going down. I think you'll find -- if you're not too fucking lazy to look -- it spending is back to record levels and rising.
Technicals don't beat fundamentals. Don't get fooled by the technical info. That's how you get disappointed and lose your money.
How in the fuck are there fundamentals when all anyone knows is CTRL-P
If that's all you know bad luck for you dude.
Technical analysis has always seemed like Hocus Pocus to me. Understand the concept, just don't think it's very useful except for day traders and the like. On the other hand, I understand that if the cost of producing 1oz of silver is >$20/oz, and it sells for <$18/oz, production will eventually stop. Given that it takes new mines 5-10 years to come on line, I would say that unless the world no longer needs silver, the price can only increase substantially, given the inevitable shrinking supply.
Most silver comes from offtake of copper and zinc production. Pure silver miners can always high-grade or hedge. No reason why marginal cost of production is any sort of barrier.
You are correct that most silver is a byproduct of other metal mining, including gold. The sale of this byproduct is used to "lower" the cost of production of the primary metals. Therefore, lower silver price still equates to decreased profits for miners, and eventual stoppage of production as the quality of the holding rock decays. Mining is one of the most inherently unprofitable business there is. It takes billions of dollars, and years of jumping thorugh regulatory hoops to get a mine up and running. Then, the local jurisdiction might decide that your mine falls under a new tax regulation, or that it needs to be nationalized, for the public good. Factor in the fact that most industry experts agree that gold & silver production is in severe decline and it becomes very difficult to envision anything but a severe physical shortage in the next few years. But, maybe I'm just wishful thinking
With the economy booming and demand picking up, naturally the price will collapse. I for one am looking forward to sub $1.00/gallon gas, it's been a long time....
wop wop wah...
[/bowie]
Russia's sanctions hit us hard. That no food import thing has re-crushed US grains.
Gee, shocking never could've saw this coming… it's almost like Stocks exceed inflation and commodities lag inflation never could've saw that coming Snark Snark Snark.
"Don't worry Charlie Brown the great gold pumpkin comes every year and rewards all those children that believe in him, you'll see!"
Lucy: "Come on out, Charlie. I promise I won't take it away. Cross my heart".
Whatever. Send AU back to $300/oz and AG to $5/oz
I could care less. That's why nobody should hold cash in bank accounts. Good luck getting any of it out to convert when this shit happens.
Maybe BABA digital trillionaires would want to convert then as well.
This week the Germans sold 2Y Bunds at -0.07% negative yield.
IT HAS TO BE CLOSE TO COLLAPSE
If the market manipulation began in 2001, perhaps you will be proven correct.
Question who's more in denial the average zero hedger or Al Qaeda? Doesn't matter, there's always a new group of suckers to join each group.
You must be long corn.
Why are my doritos 50% more expensive, with the price of corn in the shitter the way it is? WTF? Which 'food' company executive is financing his yacht with my corn chip expenditures?
Blame ethenol.
OW shucks!
Commodity capitulation coming. Long term tbond shorts next.
Deflation.
Buy a short ton of iPhones. Sell them in five years, and make a great profit then.
Brilliant!
It is important to remember, in discussing inflation, that the definition has changed over time. This is a large part of the problem in public understanding. Inflation should correctly be defined as an increase in the supply of currency, not an increase in prices. From Michael F. Bryan of the Federal Reserve of Cleveland, 1997:
There are reasons this definition changed. If inflation was defined as a function of prices or other non-monetary factors, then the government could not be held responsible for its creation. Additionally, inflation could be calculated however the controlling parties decided - not by looking at the amount of currency that was being created on an annual basis.
I knew it was the "weather" all along.
how are paper futures looking.... Paper Up toilet paper forwards tanking by chance?
Has anyone noticed a precipitous fall in gas/fuel prices with CL @ 92.50? I sure haven't.
Meh. I'm out of my short. Been getting crushed for months. It's too painful to sit there with drip drip drip losses in the expectation of the big payout if I'm right.
Course, since I'm cash I expect what they'll do now is fubar the value of the currency. The only value I see at the moment is Russia, they have WWIII priced in already.
Just checked.
You're jumping the gun. The moves are still pretty small on my 5year charts. Cu, Al are dropping yes but it's just not a big move yet.
Part of the DOLLAR Pump and Dump. Bring the value of commodities bellow the price of production so you can use your inflated FIAT paper to by more. This is a great BUYING opportunity. BTFD Baby!
Comes down to dollar strengthening relative to other currencies, particularly the Euro. We sit at an inflection point: either the dollar goes higher (DX~90) or it sells off again, dollar denom commodities rise and we remain in the trading range we've seen for a few years. I suspect the former with a weakening Euro.
I totally forgot that Yellen is raising rates next week!
Aren't cheap commodities good for an economy? Who benefits from this?
not the people around here.