Sunday, November 09, 2008

Dr. Zinc and Dr. Copper thoughts on Global Economy. CZX.v, TNR.v


Why commodities? In the inflationary environment price of commodities could never fall to zero. It is determent by Supply and Demand. Demand is going down first hurting Price, Supply is determent by Price and Price is determent by cost of production. Until world is going into Depression with Deflation (credit contraction as a reason and price falling as a symptom) Demand is there at a particular price. Price will be adjusted by marginal project going out of production reducing Supply further. Fear here made this Bear masquerade possible: all commodities Trade is based on Credit. When you can not produce reliable Letter of Credit you simply can not Trade. Watch out what metals are telling us: Inflation is coming and Infrastructure will be the name of the game. Move above 25o will confirm these affirmations.
Another less reliable thought: now everybody is telling we are in recession: we were talking about it last year. With all those money coming into play and Unemployment of 6.5% we are not so far from Recovery even in US with new debased Dollar value.

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