The slowdown in the Chinese Economy as well as the continued drag in Euroland has many calling the end to what some have termed the ” Commodity Supercycle”. As you know, we never bought into this concept, which was made to amalgamate all commodities into one homogeneous group. While most commodities have some similar drivers, such as overall economic growth, the supply and demand drivers are quite different across the entire spectrum. Just as we did not buy into the Supercycle concept, we do not buy into the new phase of the market; which we are terming the stuporcycle. In this cycle, ostensibly driven by zero growth across all emerging markets, all commodity prices are destined to fall, commensurate with a fall in the overall profitability of extraction and production. Much like a permanent plateau, we do not believe in a permanent malaise. Prices send signals to the markets, and more importantly prices drive productive capacity shifts at the margin. Much as you would expect, outflows from commodity ETF’s were on a record pace over the last few weeks as momentum and dollar strength rule the day.

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