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The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

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Page 1: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

The State of Commodities

Boom, Bubble or Bust?

Julia E. Bussie, CMT

Money Mentor

Solana Beach, CA

October 9, 2004

Page 2: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Commodity Research Bureau – CRB Index

Is It Over?

Page 3: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Headlines

• “Looking for the Next Bubble” – Feb, 2004• “The Great Commodities Bull” – Feb, 2004• “It’s a Bubble” – April, 2004• “You Too Can Tap Gushing Commodities Prices”

– June, 2004• “Explosion Ahead for Commodity Prices” – July,

2004

• “A New Secular Bull Market” – Sept, 2004

Page 4: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Bull Markets Topping in 2004

March• Soybean

Oil• Copper

April•Corn

•CRB

•Gold

•Platinum

•Soybeans

•Soybean Meal

•Silver

•Wheat

May•Gasoline

•Lumber

•Hogs

•Pork Bellies

June•Feeder Cattle

Page 5: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Bear Market Rally Highs2004

March• Oats

April•Palladium

May•Dollar

•Natural Gas

June•Live Cattle

August•Cocoa

Page 6: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Odd Men Out

• Orange Juice• Cotton• Sugar

Still Bullish

Crude Oil and Heating Oil

Page 7: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Non-specific Fundamental Factors

• Fear

• U.S. Dollar

• Globalization

Page 8: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Globalization Factor - China

• Population

• Land mass

• Arable land

• Fresh water

• Oil

Page 9: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Population -Over-riding factor

0

200

400

600

800

1000

1200

1400

0

200

400

600

800

1000

1200

1400

Page 10: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Chinese Demand

• Cement• Steel • Iron Ore• Coal• Aluminum• Oil

• Copper• Platinum • Grains• Soybeans• Cotton• Meat

Page 11: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Supply has a way of compensating for demand.

Page 12: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

• Improved efficiency

• Scientific advances

• Innovations in production methods

• New mineral exploration

• Recycling

Response to Higher Prices

Page 13: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Gold Annual Production

Page 14: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Source: IMF Staff Papers, 2002 Paul Cashin, C. John McDermott

Page 15: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 16: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 17: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 18: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 19: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 20: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 21: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 22: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 23: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 24: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 25: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

The Big Picture

Page 26: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004
Page 27: The State of Commodities Boom, Bubble or Bust? Julia E. Bussie, CMT Money Mentor Solana Beach, CA October 9, 2004

Questions?