Your fortune in a coffee cup
While reading the future in the bottom of coffee cups is a well established middle eastern tradition, John Authers has a analysis piece on the commodities run in which he tries to devise the future of the economy from the price of coffee. In "Investors should pick up a reason for commodities run" he muses:
If the "consumer demand" explanation is right, then you should not necessarily sell commodities, as the emerging markets may "decouple". But it also suggests inflation is a real threat to the emerging markets' growth, so this still is not a safe investment for the long term.
If the "investor demand" explanation is right, then commodities are a bubble. You should get out now.
If the "supply" explanation is right, then the economy is in deep trouble and pace the 1970s, commodities offer almost the only protection against what is going to hit us.
He argues factually for consumer demand explaining that emerging economies are consuming more raw material. A US slowdown in GDP growth would not dampen demand. That is the basis of "decoupling". This is probably true of metals. Oil is suffering from a tanking dollar, so may be financial, but reflected in "demand". Corn is definitely the result of the "ethanol" fiasco.
He argues factually for supply, with numbers that are so detailed they put me to sleep like Homer Simpson in front the TV with a loud snore and long saliva string on my shirt. I believe it, supply is not moving much.
So the difference has got to be investor driven? He explain the "investor" demand. Essentially amid the credit market and equities market meltdowns, commodities offer the last inflation protected (since they drive inflation) asset class, at least in theory and we got a lot of investment momentum in there.