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The Standard & Poor’s GSCI gauge of 24 raw materials will end the year at 677, 3.6 percent higher than now, based on the median of 10 investor and analyst estimates compiled by Bloomberg. The index is about 3 percent lower since the European Central Bank announced an unlimited bond-purchase program Sept. 6 and 5 percent below its level when the Federal Reserve pledged a third round of debt-buying Sept. 13.
That contrasts with a 92 percent surge from the end of 2008 through June 2011 as the Fed bought $2.3 trillion of debt in two bouts of quantitative easing. The impact will probably be smaller this time, Barclays Plc says. Prices are already in a bull market, the 17-nation euro area is contracting and China has slowed for six straight quarters. Europe and China represent about 60 percent of global copper demand and about 33 percent of crude-oil consumption. “The investment demand that might be driven by people’s changed perception after Fed action is not going to sustain a further long-term move of the commodity complex,” said Michael Aronstein, the president of Marketfield Asset Management in New York who correctly predicted the slump in prices in 2008 and the rebound in 2009. “The longer you keep prices in all of these sectors elevated, the more supply you recruit.” ... Continue to read.
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