Category: Fundamentials

Here is a spot current gold price chart which is updated throughout the trading day.

As one can readily see the price of gold oil is extremely volatile. While the economic slow down in the US and world economy (recession – depression) is clearly evident the slowdown has not yet drastically reduced the demand for gold. There is continued strong physical demand from India, China, and the Mid East.

While the economies of China and India have slowed to a 5% to 6% growth rate that is still a lot of new demand in nations with such large populations. China and India together must have about 2.5 billion people, many which are demanding more gold jewelery and gold bullion as protection against the economic uncertainties of today. There is nothing new in that. Gold has served as a storehouse of value during uncertain times for thousands of years.

The supply of oil supplies over the next five years and beyond looks especially grim. Current lower prices are curtailing the exploration and development of not only new oil fields but of alternative energy sources. Energy conservation measures have cooled off as oil prices have declined. World oil production seems to have peaked at about 85 millions barrels daily. With new oil production and exploration projects being shelved, at least for now while oil prices are relatively low, any increase in economic activity around the world can quickly lead to another oil price spike.

The United States Department of Agriculture USDA collects a staggering amount of information on crop production within the US and from around the world.

While unless you are careful one can subject themselves to USDA information overload the information can be quite useful to those who take a longer term view with their commodity trading. And those are the folks who over a reasonable amount of time make the big money from commodity trading.

With climate change sure to effect the production of crops worldwide the USDA’s weather and climate pages contain information, like “Weekly Weather and Crop Bulletin” that are well worth checking out frequently.

There is also published a report named “Major World Crop Areas and Climatic Profiles that can give one a worldwide perspective on crop conditions. 

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The rapid industrialization of China and India continue.

While we should be happy that the living standards in these countries have been increasing we should also be aware that extreme demand pressures in the face of declining supplies will put upward price pressure on many commodities for at least the next several years and perhaps much longer.

The following is from the Daily Reckoning news letter service:

“the entire world can’t get enough copper, zinc, lumber and oil. But bringing on new production takes time. Supply can’t catch up with demand overnight. In fact, it’s going to take quite some time, especially when you throw the consumption potential of India and China (37% of the world’s population) into the mix. Consequently, commodities, the market for the essentials, will remain tight for the foreseeable future. ”

Of course, markets do not move in a straight line, especially commodity markets. However, the long side of markets like copper, lead, gold, silver, lumber, and oil should be favored for many years to come.

That means buying or adding to positions on price corrections, and looking for the bull market to continue for a long time to come.

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