I agree, a strengthening dollar will probably have a lowering effect on commodity prices, especially gold & oil. I personally do not completely buy the fundemental story of global demand, don't get me wrong there is an increase in global demand but not to the degree that the prices are at. This is definitely a speculation bubble, do commodity prices warrant a higher premium, yes but not to the degree that we are at. I find it funny how the price per barrel of oil can triple in value in such a short time frame due to the supply/demand story which is overblown, the lowering dollar and OPEC's desire for higher profit margins has created this. China, India didn't just in the last 3 years decide to grow this has been an evolving process that has been taking shape for many years. Just my 2 cents. I appreciate the discussion on this topic.

oneslip:

I agree, a strengthening dollar will probably have a lowering effect on commodity prices, especially gold & oil.

Especially gold.  No way is the increase in gold prices over the last 6 months due to a demand increase, not even a bit.  That is pure speculation and all based on the weak dollar.

oneslip:

I personally do not completely buy the fundemental story of global demand, don't get me wrong there is an increase in global demand but not to the degree that the prices are at.

I agree and the increase in demand is about to decrease as asia feels the effects of the US recession.

oneslip:

 

This is definitely a speculation bubble, do commodity prices warrant a higher premium, yes but not to the degree that we are at. I find it funny how the price per barrel of oil can triple in value in such a short time frame due to the supply/demand story which is overblown, the lowering dollar and OPEC's desire for higher profit margins has created this. China, India didn't just in the last 3 years decide to grow this has been an evolving process that has been taking shape for many years. Just my 2 cents. I appreciate the discussion on this topic.

yes, the commodities bubble will burst as soon as everyone becomes convinced the Fed is about to raise rates.  Even sooner if the Fed doesn't lower rates at its next meeting tomorrow.

Hoarding is a form of speculating I think.    Some restaurant operators have accelerated their buying of rice,  or hoarding,  in anticipation of higher prices down the road.

The only difference is that the speculators act on the futures markets and the restaurant operator does it at Costco Wholesale or whoever would sell them the quantities they want. 

Both actions have an effect on the market price,  but not easy to quantify.