But there is no commodities bubble yet. Commodities haven't even begun their big rise - this is just the opening dance.
Would it be fair to say that commodities are still a buck a gallon?
We’ll see. Once the $ begins to really rebound, which should be after the fed indicates it’s done cutting either this week or the next meeting, IMO commodities are going to get hammered. Many, except oil, are already well off their highs (Wheat is down around 30%, gold 15%, silver 20%, etc)
"What we normally have is a predictable group of sellers and buyers -- mainly farmers and silo operators," he says. But the landscape has changed since the influx of large index funds. Fund managers seek to maximize their profits using futures contracts, and prices, says Warner, "keep climbing up and up."
He's calculated that financial investors now hold the rights to two complete annual harvests of a type of grain traded in Chicago called "soft red winter wheat."
I wouldn't want to be on the caught on the way down when those investors begin to sell and then panic sell. 2 seasons worth is a lot of crops that right now is owned by no one with no intentions of taking delivery.