Commodities Essential - March 1, 2011

Over the last year, the supply of so many commodities has become rather tight. For some it has happened because the industry simply has failed or chosen not to invest in new production. Other supplies have been devastated by a stretch of unfortunate weather. And still other supplies have been in high demand due to stock-piling, investing, upticks in manufacturing, etc.

For all of these reasons, I do not believe the investment story for commodities is as simple as most analysts make it out to seem …

Let me emphasize the note of caution here: the bullish fundamental story has nearly become obvious - too obvious. And such extreme levels of optimism can portend major market turns. In this case, a major turn means severe downside for the commodities complex. 

But I don’t think we are there yet; we are not yet in bubble territory. 

Commodities Essential. 1 March 2011