Commodity soothsaying

Readers are fond of asking me for forecasts, particularly, recently, in the commodities market. I see three possibility for the commodities markets:

1) They will go up

2) They will go down

3) They will stay about the same

Further than that I am unwilling to say.

Others aren't quite so cautious. There's a bit of discussion amongst the blogs of Paul Krugman's piece on commodity prices; Ryan Avent has a pretty good round up. The case for a continued upward trajectory seems very compelling to me. The problem is, market trends generally look most inevitable right before they're about to collapse. Or as one analyst I knew once said, "I keep telling [my colleagues] no! no! no! If you think the market has capitulated, it hasn't capitulated!"

Every time I am tempted to make confident forecasts about commodities markets, I fix my mind firmly on the spectre of The Economist's $5 a barrel oil cover, which heralded the early innings of the current fantastic run-up in oil prices. That story was written by a very, very smart energy analyst who has forgotten more about oil markets than I will ever know. If he can't foresee major market movements, I'm darn sure I can't.