Why Have Prices on Many Commodities Increased Substantially Over the Past Couple of Years?
Wednesday, October 15th, 2008 at
4:06 pm
Dreamy asked:
Prices on many commodities have increased substantially over the past couple of years. What has caused this rise?
Prices on many commodities have increased substantially over the past couple of years. What has caused this rise?
Filed under: Commodity Trading
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The reason is due to supply and demand but more specifically to the increased money supply. The Federal Reserve prints about 17% more dollars every year. This same type of monetary policy has occurred across many other nations so you have prices increase just to keep up with the limited supply of scarce resources.
Its hard to talk in general, but mostly demand from developing markets is exploding. China has been on a huge building spree, and anything China does has a huge impact just by nature of their population. Coal, Steel, Copper, Uranium, fertilizers, food, how long is the list?
The low dollar. All commodities are traded in dollars.