Matthew Boesler interviews L. Randall Wray regarding his views of the present commodities bubble:
We’ve discussed this topic before on Benzinga Radio, with respected market analysts like Dan Dicker (again) and Fadel Gheit–financialization of commodities markets. At issue: massive institutional inflows into paper commodities, which end up factoring into prices much more than, say, real supply and demand for the physical assets. The result? A bubble.
That term–bubble–gets thrown around pretty loosely these days, and it’s often a contentious issue, especially in the commodities context. We’ve spoken to several others on Benzinga Radio, including successful investors like Jim Rogers and Marc Faber, who are outspoken advocates of the long commodities trade in the coming years. The question now, with evidence of a coming global slowdown increasingly in focus, is whether commodities will continue to outperform. The last few trading sessions, going back a week or so, certainly seem to have raised concerns.
Dr. Randy Wray, a respected economist at the University of Missouri, Kansas City, was commissioned by congressional offices in 2008 to look into the commodities markets as prices marched to record highs during early summer before crashing in July. He spoke with us on Benzinga Radio, raising several interesting points about the evolving dynamics of the commodities markets and the statistical significance of the change in prices we’ve seen over the last several years.