Commodity Prices Other Than Precious Metals Unsustainable Until Fiat Money Crashes

Commodity prices are unsustainable at current levels given the fundamental weakness in the economy. The illusion of economic recovery tied to the stockmarket is quite unattached from reality as most of the time the stockmarket is not a good indicator of the economic health especially at a widespread measure. Most of the country do not participate in the stokmarket (roughly 80% of the population of the US and even lower in the rest of the world). So the "gains" in the market since the March 2009 levels do not do anything for a huge majority of people in both the developed and developing world. However, unemployment is much higher and as productivity increases show real wages have been tanking even lower increasing the income cliff between the few that participate in the stockmarket and the huge majority that does not. This is one reason the government should be less concentrated on the stockmarket and banks and more on the people and on unemployment issues. I would say the Fed should be doing the same, but at this point it is quite clear given the actions of the Fed that it is not there for the people of the country, but rather for the banks and a few other moneyed powerful individuals.

In an economy that is 70% consumption, this is a terrible situation made worse by the burgeoning income/wealth cliff. That goes back to our title. The commodity prices for most manufacturing goods such as steel, copper, coal to count a few do not make any sense. For example steel despite lower volumes due to lower demands is somehow up at $144 from $60 dollars prior year. That is insane considering even gold which has a huge demand increase is up only 20%+ and there is a whole lot more reason for gold to go up given its historical role as real money than there is for steel. Gold of course is manipulated down by central banks and it will continue its rise in the longer term and should in the shorter term to had it not been for central banks trying to fight the shift away from paper money and paper assets by attacking gold. However, prices of industrial metals and commodities need to come down to more sustainable levels which means there is downside for close to 60% or more given the demand and supply dynamics.