Economy
Related: About this forumWarning Signs From Commodity Prices
For many consumers and businesses the recent drop in commodity prices has provided a tidy windfall one analyst estimated that the typical American household would save $400 a year thanks to lower gasoline prices. But the tumbling price of fuels, metals and other commodities is also sending a warning about the global economy.
Over all, commodity prices have fallen nearly 15 percent since late June, according to a Bloomberg index. Last week, the price of crude oil dropped to a four-year low, about $74 a barrel, down from about $107 a barrel in June. The prices of metals like copper, platinum and silver have also fallen sharply since the summer.
The decline can partly be explained by economic changes taking place in China. In the last two decades, the country has been gobbling up the worlds coal, iron ore, copper, oil and other commodities to build new cities and fuel its booming economy, which grew at an average pace of nearly 10 percent a year for three decades. But that growth rate has now slowed, and with it Chinas demand for raw materials. This year, the country will grow at 7.4 percent, according to the International Monetary Fund.
The world had anticipated Chinas economic transition, but it was much less prepared for stagnation in Japan and in much of Europe.
http://www.nytimes.com/2014/11/16/opinion/sunday/warning-signs-from-commodity-prices.html?hp&action=click&pgtype=Homepage&module=c-column-top-span-region®ion=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=0
gilpo
(708 posts)We cannot continue to increase consumption infinitely; drop in demand is a good place to start the decrease (better than scarcity). Consumption has to level off, then decline at some point soon, survival of our species depends on it.
elleng
(131,141 posts)but the world is a big and troubled place, and there are millions of underfed people.
Warpy
(111,359 posts)is extending to gold, which means institutional investors have realized the ride is over and a hedge against inflation doesn't work very well during periods of deflation.
The only question is how long it's going to take the big money boys to realize the golden goose isn't capital at the top, it's wages at the bottom.
elleng
(131,141 posts)Some do know but not, it appears, in the majority.
golfguru
(4,987 posts)When gold was $1800, the poster was super bullish.
Have not heard a peep from her lately.
Warpy
(111,359 posts)I'm surprised it's still near $1200, that still keeps it so far ahead of inflation that it will likely take decades for inflation to catch up to it.
With China entering their own deflationary period, they're likely to dump it while they can.