Worldwide Commodity Boom Or Bubble?
The ongoing rapid economic growth in the BRIC (Brazil, Russia, India and China) countries and emerging economies such as Pakistan has dramatically increased demand for food, oil and metals driving up prices. Here are some of the recent headlines that I find particularly notable: 1. It costs the US Mint two pennies worth of metal to make one penny. 2. One Indian rupee coin is worth Rs. 35 when melted and turned into razor blades. 3. Gold and oil prices hit new highs in the world market in 2007. 4. The price of wheat has nearly doubled from about $200 per ton to $400 per ton in just a few months. The current worldwide commodity boom began with the genuine increase in demand from the fast growth in emerging economies of the world. However, at least part of some of the recent increases appear to be driven by speculation in the commodities markets with many hedge funds and big investors trying to make a fast buck. One of the downsides of such speculation is that it may fuel worldwide infla...