Chart usGOLD   Chart usSILVER  
 
Food for thought
If men are good, you don't need government; if men are evil or ambivalent, you don't dare have one
Robert Lefevre  
Search for :
LATEST NEWS  :
MINING STOCKS  :
Subscribe
Write Us
Add to Google
Search on Ebay :
PRECIOUS METALS (US $)
Gold 1294.08-0.58
Silver 19.630.01
Platinum 1404.500.00
Palladium 794.900.90
WORLD MARKETS
DOWJONES 16409-16
NASDAQ 40969
NIKKEI 1451699
ASX 544532
CAC 40 443226
DAX 941092
HUI 220-2
XAU 90-1
CURRENCIES (€)
AUS $ 1.4802
CAN $ 1.5214
US $ 1.3811
GBP (£) 0.8224
Sw Fr 1.2201
YEN 141.4700
CURRENCIES ($)
AUS $ 1.0722
CAN $ 1.1021
Euro 0.7241
GBP (£) 0.5956
Sw Fr 0.8833
YEN 102.4300
RATIOS & INDEXES
Gold / Silver65.92
Gold / Oil12.37
Dowjones / Gold12.68
COMMODITIES
Copper 3.040.02
WTI Oil 104.590.83
Nat. Gas 4.740.21
Market Indices
Metal Prices
RSS
Precious Metals
Graph Generator
Statistics by Country
Statistics by Metals
Advertise on 24hGold
Projects on Google Earth
The real reason for rising commodity prices
Published : February 07th, 2011
546 words - Reading time : 1 - 2 minutes
( 1 vote, 5/5 ) Print article
 
    Comments    
Tweet

 

 

 

 

An article  in The Wall Street Journal highlights the latest rise in the price of wheat.  Blaming bad weather, it notes that the “global wheat market is caught between freezing winds and a sirocco.”

 

The WSJ therefore warns that “investors should beware of whiplash as weather normalizes.”  Given that wheat is “up 13% since the start of December”, it is good advice – if weather were to blame. 

 

The reality is that wheat is being driven higher by more than bad weather.  The price of wheat has been climbing since June, a fact conveniently ignored in the WSJ article, perhaps because it doesn’t square with its premise that bad weather is causing higher wheat prices.  Are we to believe that the market knew seven months ago that weather around the world today would be so bad that it would impact global wheat output?  Or has wheat – which has risen $3.50 per bushel, or 70%, since its June low – been climbing steadily higher over these several months for another reason?  And more to the point, why are all commodity prices rising?

 

For example, since June copper has risen $1.70 per pound, or 59%.  Is bad weather to blame?

 

No, of course it isn’t.  Something else is at work here.  Maybe wheat has risen more than copper over this period because bad weather really has had some impact on wheat production.  But obviously, given that commodity prices are rising across the board, we have to look for other factors that are causing this surge in prices.  And we do not need to look too hard.  Just consider the money printing – a/k/a “quantitative easing” – by central banks going on all around the world.  QE is building up tremendous inflationary pressures in the pipeline of goods and services, which for months now has been showing up in the area most sensitive to monetary debasement, namely, commodity prices.

 

The WSJ article ends by warning that “political storms could provide a tailwind for wheat prices.”  That could be, but right now, the gathering monetary storm is far more important, and there is one easy way to seek shelter – buy physical gold.  Look at the correlation between gold and the CRB Continuing Commodity Index in the following chart.

 

 

 


 

 

 

The above chart makes one point crystal clear.  Rising commodity prices are not short-term phenomena.  Except for a brief deflationary blip in 2008 after the collapse of Lehman Brothers, this CRB Index of 17 essential commodities has been rising steadily all decade – and it is meaningful to note, so too has gold.

 

So I wouldn’t worry about any shortage of wheat, provided you own physical gold.  Farmers will continue to grow produce, and the market in which money is exchanged for food will continue to function as it has since humankind began to interact in commerce thousands of years ago.  So regardless what happens to the price of wheat, you will continue to buy bread in the future just like you do today, provided you have physical gold to preserve your purchasing power from the ongoing debasement of national currencies being engineered by governments and central banks

 

 

 

 

 

James Turk

 

All data and quotes sourced from Reuters.

 

Published by the Free Gold Money Report. Copyright © 2010. All rights reserved. 

 

 

 

 

 

 

 

 

Tweet
Rate :Average note :5 (1 vote)View Top rated
Previous article by
James Turk
All articles by
James Turk
Next article by
James Turk
Receive by mail the latest articles by this author  
Latest comment posted for this article
Be the first to comment
Add your comment
TOP ARTICLES
Editor's picks
RSS feed24hGold Mobile
Gold Data CenterGold & Silver Converter
Gold coins on eBaySilver coins on eBay
Technical AnalysisFundamental Analysis

James Turk

James Turk is the founder of the Free Gold Money Report and of GoldMoney.com. He is also the co-author of The Coming Collapse of the Dollar (www.dollarcollapse.com).
James Turk ArchiveWebsiteSubscribe to his services
Most recent articles by James Turk
4/17/2014
4/11/2014
4/8/2014
3/14/2014
3/12/2014
All Articles
Comment this article
You must be logged in to comment an article8000 characters max.
 
Sign in
User : Password : Login
Sign In Forgot password?
 
Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.
Disclaimer