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Such is the turmoil speculators are believed to cause that Nicolas Sarkozy may use France's presidency of the G20 to push for rules to curb their activities.Investors have certainly acquired more of a taste for commodities over the past few years.
The inflation you created in order to bring the dollar down is reflected in the soaring price levels for commodities over the past 11 months.
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Jeremy Grantham, a money manager, wrote in 2011 that "price pressure and shortages of resources will be a permanent feature of our lives".In a new paper David Jacks, an economist at Simon Fraser University, assembles figures on inflation-adjusted prices for 30 commodities over 160 years.
Nevertheless, Australia's resource giants "will still be maintaining long term bullish forecasts and they'll be investing based on those forecasts," given that demand for commodities will rise over the long-term from China and India, Rocks said.
The outlook for commodity prices over the next 12 months is bleak.
That would be good news for farmers who have faced higher and higher prices for commodity seeds over the past decade.
Figure 6 Average prices over time for commodities purchased and livestock sold.
As Professors Rouwenhorst and Gorton contend, the argument for commodities investing via futures is straightforward: Over the long run, it provides stocklike returns, inflation protection and diversification.
Railroads are sometimes an indicator of demand for commodities, CSX's 28% growth in stock over the last year mirrors the growth in futures like corn, soybeans and coffee.
But renewed growth has rekindled the demand for commodities and pushed oil prices back from around $30 per barrel to over $90.
And to compound all this, prices for commodities produced in the third world have fallen disastrously over the last decade.
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