What’s Really Driving The Crazy Rally In Commodity Prices?

Bulls are pointing to the surging metals prices as evidence a supercycle is alive and well. However, no one but a snake oil salesman would suggest that what we are seeing is anything healthy. The 10-year commodities boom seen earlier this century, for example, was driven by rapid industrialization in China, a long-term expansion that lifted hundreds of millions out of poverty. Energy costs drive supply constraints But the current surge in prices is a result of energy markets driving supply-side constraints. Apart from the chaos that is the current…