Drowning in Aluminum

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Exponential trend failure! Let's step back and see how bad it really is.


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Nasty! The aluminum speculators must have loved this break in the trend. We're not growing global aluminum production anything like we once did. And as an added bonus, the Fed is doing all it can to support prices! Let's see how it is going.


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What? Aluminum prices haven't been keeping up with inflation? Just something to think about if you are long commodities and/or fear hyperinflation. The Fed might be creating money out of thin air but the mining companies have been plenty busy attempting to meet our nearly insatiable demand as well. Our demand apparently does have limits. You probably won't hear this from a commodities trader these days though.

April 16, 2012
The Next Global Crash: Why You Should Fear the Commodities Bubble

Investors have gone crazy for commodities, pouring money into everything from oil to copper. Just like the world's mania for tech stocks in the 1990s, this boom is headed for a bust.

For what it is worth, I think it is a distinct possibility. I wouldn't bet the farm on this theory but I wouldn't rule it out either. There's also an issue of timing. When will it bust? You tell me and we'll both know. Perhaps it depends on China.

April 17, 2012
The Ghost Malls of China: Inside a Commercial Real Estate Bubble

And the overcapacity isn't limited to real estate. Chinese industry has been churning out massive amounts of steel, cement, and aluminum -- so much that there are doubts about the economy's ability to absorb the output.

Source Data:
USGS: Historical Statistics for Mineral and Materials Commodities
Kitco: Base Metals Charts and Graphs
St. Louis Fed: CPI