Friday, February 01, 2008

Commodity Price Indexes Reach New Highs

The Reuters-CRB Index of commodity prices, aka the CRB futures index, rose above the key level of 500 for the first time ever yesterday (although it touched it on Tuesday as well) and ended at 503.27, up 27% from a year ago.

The other CRB commodity price index, the CRB spot index, also reached a new all time high yesterday of 439.03 . This index have risen "only" 20% the latest year.

The Economist's commodity price index also reached a new all time high, at 232.4. It is up 25.7% the latest year.

This means that the commodity price boom continues to be strong, just as Jim Rogers and I have repeatedly predicted. It also implies continued strong price inflation, contrary to the views of "deflationists" (in the sense of predicting the future, not advocating it) like Nouriel Roubini and Mike Shedlock.


Anonymous Anonymous said...

but will not commodities fall when the international economy slows and the dollar rises during 2008?

safe haven buying of the undervalued USD is not good for commodities


2:59 PM  
Blogger stefankarlsson said...

The U.S. dollar will not rise because it is in fact greatly overvalued. It is basically the worst currency around except for maybe the Zimbabwe dollar.America has a huge current account deficit while having far lower yields than anywhere else. A capital importer that provides worse return on investments than others is a sure recipe for a falling currency. The fundamentals clearly argue for a continued dollar decline.

7:11 PM  
Anonymous Anonymous said...

we will se, but the USD is starting a short upturn just now at any rate


1:13 PM  
Blogger stefankarlsson said...

We now for sure your alleged upturn hasn't started yet-the USD is at or near all time lows against most currencies, and so is the broad dollar index. As for the future, we'll see as you say, but contrary to you I am confident it will continue to fall interrupted by only brief and relatively small corrections.

7:03 PM  
Anonymous newson said...

just a curiosity - why would the economist's commodity index exclude oil? that gold is excluded i find easier to forgive.

3:57 PM  
Blogger stefankarlsson said...

Newson, I don't know, it doesn't make any sense to me either. You'll have to ask them about that.

4:44 PM  

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