Minyanville > Markets
Commodity Prices Headed for a Huge Drop
By Erik Swarts Sep 30, 2011 2:40 pm
We may be at the back end of a historic super cycle in commodities, and the decline will help businesses and consumers while devastating emerging economies.
Although I have been trading in very short timeframes as of late, I like to keep an eye on the bigger picture as a sort of ballast to my approach in the markets. Lately, there has been a tremendous amount of debate and discussion on the collapse of bellwether commodities, such as copper, and what it means downstream for the economy and the stock market.
You may hear the old market axiom, “Every bull market has a copper top,” used by various pundits in the financial media. And while there have been enough occasions for that dynamic to ring true, a broader perspective toward the long-term commodity cycle should be introduced in the discussion for greater context.
I believe we are now on the back side of one of, if not the greatest commodity super cycles the world economy has absorbed. The ramifications of this for the global economy will be far-reaching — from the cheaper input costs in manufacturing and shipping goods to the considerable benefits of cheaper energy for the average consumer.
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