Displaying items by tag: Commodities
The commodities boom has been going on since at least late last year, but the big question is where the booms in many underlying raw materials can last. At least as it concerns major commodities like oil, minerals, and lumber, the answer is a big yes. The reason why is that the current boom has to do with underinvestment in production over the last 18 months, a problem that is hard to solve quickly. This means demand will outstrip supply for the foreseeable future in many areas. Lumber is a good example, where underinvestment has led to soaring prices.
FINSUM: Capital has not been adequately invested to meet the demand of consumers and prices are showing it. Equilibrium will take some find to find. There is a nice runway for commodities.
With the huge CPI number hitting the tape yesterday, gold had a predictable reaction: it rose. Since bottoming out a few months ago in the $1,600 range, it has since risen to over $1,900 as inflation fears have picked up. However, inflation is not the only thing driving the metal, as the Fed is playing a big role too. If the Fed stays dovish, and therefore the path of rates looks to stay low, then gold is in a great position—higher inflation with little rate risk from the Fed.
FINSUM: Gold is in a good spot. The Fed will only start hiking if inflation really jumps, which would push gold higher anyway. If inflation is more mild, then at least their won’t be rate pressure.
Many investors want gold exposure without holding any of the precious metals directly. Some have gone the route…see the full story on our partner Magnifi’s site
Gold has been a strong but steady incline for most of 2021, but…see the full story on our partner Magnifi’s site