trainwreck

commodities have made a huge run in 2007. it cant last forever, any predictions on the next bubble?

from the surface, it seems like each bubble that was created have no relation to each other

dotcoms -> real estate -> commodities/alt energy???

but the underlying drivers that started each bubble were exuberance and low interest rates/wild funding.

dotcoms promised efficiency, fast money, new tech and ideas...

bubble pops, interest cut to zero, free money for all. buy a house with 0 down. seemingly free equity for all as long as prices escalte.

bubble pops, dollar plummets in value, giving rise to commodities, the rio's and mt's, gold, food have all enjoyed tremendous growth. so now what? how far are we along in the current commodities bubble?

i predict the next bubble will be contructio/transportion. maybe a return to tech.

reasons for my prediction,

money has shifted to commodity producing countries. they will want to modernize.

WyattH

Good thread. I wish I could contribute - but I'll be reading ideas from the sidelines.

sahtt

It's too broad of a topic. People throw around the word 'bubble' way too much, corrections are perfectly natural and do not always cause disasters. I'd say the current housing situation deserves the labeling 'bubble', as does the japanese issues of the 80's that are still being sorted out, but commodities [gold included] will go through corrections from time to time but as long as the dollar slides and world wide wealth grows, so will commodity prices if production is not proportional [it won't be, it will always lag].

lOOkatme

Its tough to say what the next bubble is.


I don't know if agriculture or oil are bubbles.


bubbles are tough to predict.....but if given these constraints....maybe we can see why prices are high.


Oil supply is not keeping pace with demand.......obviously demand cannot physically outstrip supply....so price is the determining factor. you have people adding millions upon millions of cars to the supply side....and no new supply increases for 3 years. When looking at the demand side....if supply were to keep up with demand it would need to add a north sea of production every year. which is impossible by what most insiders are saying.....so price will keep rising with the dips being short term. conventional oil is in decline now. oil sands will not make up the difference in production loss....as the declines will be pretty steep....and oil sands cannot ramp up tens of millions of barrels a day. so supply will actually start to decline here shortly.........while demand will want to outpace a much higher thirst....but price will need to rocket higher to starve demand.

Crude oil has had a bumpy plateau since 05.......most projects coming online will only replace the declines.....and with the declining EROEI.....more oil is going back into the system to get more oil. "Free energy" is declining from oil.....as is for Coal.

here is production up to March 2008

http://www.theoildrum.com/tag/opec



wheat, soybeans, rice, corn, etc are all at record low inventories...some at 60 yr record lows. If you look at the amount of land used for agriculture....is now starting to decline......since more and more people are occupying the earth. We either need to make the land more productive....or start cutting down rainforests or condensing to have more arable land......but we also hit water constraints...droughts, floods, etc at times. But I see this much more susceptible to a bubble then oil is. but on the other hand....if oil/NG increases......it puts pressure on food prices as well.



Here is a professor speaking about Peak Everything

http://youtube.com/watch?v=2p6U-ZvR5Yk

trainwreck

i dont see oil reallly being a bubble, because exuberance is not a factor in driving up prices.

also not comparable to china bubble, where regular people were taking out loans and buying stock.

agriculture is a maybe, just looking at todays ag stocks i am seeing....

Monsanto (NYSE: MON)
1 year performance
106%

Potash (NYSE: POT)
1 year performance
212%

Mosaic (NYSE: MOS)
1 year performance
312%

Agrium (NYSE: AGU)
1 year performance
73%

agu jumped 6% and another 2% ah... trading at alltime highs

lOOkatme

[QUOTE=trainwreck,Apr 14 2008, 03:44 PM] i dont see oil reallly being a bubble, because exuberance is not a factor in driving up prices.

trainwreck

thx for the link. pretty interesting

lOOkatme

[QUOTE=trainwreck,Apr 14 2008, 04:00 PM] thx for the link.

therookie

"I see metals continuing to increase in price."

Harpoon

I have the next bubble - original art - it is already starting to take off. Great investment, make double digit returns for a couple of years and then zero returns for two decades. Bubbles are nasty.