After a massive surge over the past year, commodities prices have suddenly slumped.This could mean one of two things.
Either, commodities bears are right and this is the beginning of the bursting of the commodities bubble (in which case, look out below).
Or commodities bulls are right and this “dip” is your last buying opportunity before massive human over-population competing for finite natural resources sends commodity prices into the stratosphere.
Jeremy Grantham, meanwhile, argues that we’re headed for a disaster of biblical proportions–one in which the demand for commodities (including, eventually, food) outstrips the supply and prices go to the moon.
Unfortunately, these scenarios may not be mutually exclusive. Unless we radically reduce the commodities-per-capita the world consumes–or somehow magically discover vast new sources of oil, metals, and food–it seems inevitable that demand will eventually permanently outstrip supply.
(That’s why hedge-fund managers are buying up all that farmland, by the way: To invest in a coming food crunch in which the price of arable land continues to skyrocket.)
If China goes through a bust, thus temporarily depressing demand for commodities, this will just delay the inevitable.
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