What made me look into this question is, almost absolute confidence exhibited by Commodity Bulls, that this time it is different and the price will rise relentlessly for foreseeable future. I am especially was suprised by a guest on Kudlow show, his first name was Kevin (did not get his last name), who said with total confidence that Crude will go to 150 and Gold will go to 1500. It is very well possible that he may be right.
But this is where I am going with this. Given that USA is in a Recession (whether it is DEEP or shallow we will know only in fullness of time), Japan is in one. Europe, either it is already is on or will there soon. Given that three Biggest Blocs of Economies are/in recession, can India or China continue with relentless growth and de-couple from other big economies.
If you want to know about growth of India or China all you need to do look at their market indices. Sensex and Shanghai respectively. Sensex went from 21200 to 15,975.52. That a shave of about 5000 points. Shanghai Composite Index lately has been week. FXP which is a Untrashort on top 25 stocks in China is going up.
In other words, is it possible we will going to have a global recession with China and India considerably slowing down. To conclude whether this is how things will unfold, keep on two instruments, they are DUG and SMN ( Disclosure: have positions in both).
You can learn a lot just by observing, just keep an eye on these two:
It is my opinion, if Crude stays about 85/- by next year at this time, then it would safe to conclude it is indeed different this time. But I am betting otherwise, that is price of Commodities will come down a lot.
Thanks for reading
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