Interest Rates Set to Go Much Higher in Current Commodity Price Cycle
Monday, June 25th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential
Investors are worried about rising interest rates in the bond market, and rightly so. It is my hope that this isn’t the beginning of a sustained period of rising interest rates. With the commodity price cycle still in full swing, it is definitely a possibility.
Petroleum-based commodities have already experienced their upswing in prices, as have precious metals. Now, it’s my belief that agricultural commodities prices will have their turn with a sustained upswing in prices. This will be the last leg of the current commodity price cycle, and very welcome in the agricultural economy.
Commensurately, inflation will be a problem. In fact, I think it’s really quite amazing that we don’t have more inflation in the economy than we’re currently experiencing. I guess we can thank a slowing economy for this.
This leads me to believe that if we do experience a resurgence in economic growth while we’re still in the current commodity price cycle, interest rates will have to go much higher. This would not be good for the stock market.
But you can examine all the fundamentals as much as you want — we’re still all just guessing as to how things might turn out. I’m pretty confident about the commodity price cycle moving to the agricultural sector. It’s already happening. This is good news for rural economies, because virtually every dollar a farmer makes from his or her business goes right back into the local economy.
I can’t tell you how things will play out over the next few quarters; only, I think it’s time for some caution. Stock market speculators have had such a good run over the last 18 months. A little break is not unreasonable.
Next Post: Time to Do a Web Search for “Premier Internet Play”
Previous Post: A Week Investors Would Like to Forget
Tweet
Sign Up for PROFIT CONFIDENTIAL and
receive a FREE copy of our exclusive report:
"A GOLDEN OPPORTUNITY FOR STOCK MARKET INVESTORS"
We respect your privacy and
will never share your e-mail address.
Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.
