Are commodities overpriced and about to tumble some more?

Question

Are there any fundamentally sound commodity investments out there right now? Commodities seem way overpriced and I don't think we should be paying this much for them. What do you think?

(Please only reply to this if you have something intelligent to add.)

Answer 1

That's the theory. Seems like all the commodities are dropping right now. The idea is that commodities are in a broad uptrend (in my opinion due to inflation that has been masked by cheap goods coming from China, but that's another argument). But the commodity markets got ahead of themselves due to overly exuberant buying by unsophisticated investors. Thus, this will be a harsh correction, but the long-term may continue upward.

This may or may not be true, however. Another thing I've been hearing is that some commodity production facilities have been overbuilt. This is common in cyclical industries, and wouldn't be a great surprise. What happens is that, as overbuilding takes place, production levels rise above the consumption demand, causing prices to plummet. I've heard this is true of copper, but I don't think oil has hit that level yet, mostly because of the enormous cost of increasing refining capacity. Only time will tell what the reality is, but this kind of uncertainty is why I've never found commodity markets to be very appealing. I strongly prefer growth stocks.

Answer 2

i think silver is cool too, also check out zinc and the grain commodities, wheat, soybeans, etc, they are due for a move up, commodities could be weak for a bit longer, but they will be higher 5-10 years from now than they are now due to emerging market economies. BRIC (Brazil, Russia, India, China).....

Answer 3

Silver is the most undervalued commodity out there. It will go to 20 without question..imo