Look into your crystal ball...What does the commodity market look like at years end.

Ok, so everyone is waiting for Bernanke to cut the bonds buying maybe by years end, where does that leave the commodity market at? If you could look into the near future and had a chance to make a move on the commodities market, what would that move be and what are you buying?

Also is the economy really improving or is this just a push for the government to get us to think that is the case?

 

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My crystal ball is on the fritz, but my guess would be the Fed would slow down buying without telling anyone after that last fiasco, and interest rates will start to rise a little. For commodities as a whole, (absent commodity specific events), I believe this will put downward pressure on prices, as yields improve in other areas. This will be the course of events until such increased interest rates force the start of higher inflation, which itself will move commodities higher, but that would be a secondary effect.

Since there literally a billion variables, I would be shocked if I were right.

 

Are you talking Commodities in general or PM's I see commodities rising in general with PM's still falling. PM's were so overbought, which is not the case with things like Kansas Winter Wheat, so I don't think you can group PM's with commodities in general. Inflation should start creeping in, which is why I think the overall commodities market will rise.

Here is a link to an ETF that tracts the GSCI Commodity index. The GSCI is weighted so engery seems to be the biggest component. PM's only make up a small portion of the index, maybe 3%, I can't remember exactly.

http://finance.yahoo.com/q?s=GSG

 

To me, in the short/medium term, rising nominal interest rates are currently being driven by rising real rates of return. I expect this to continue as the economy recovers and should put downward pressure on PMs in general as other income/value producing investments become more attractive.