Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 2 December 2016



Greetings again, pop pickers.

Fans of bubbles and speculative orgies will find some reasonable amusement in this. 

The Reserve Bank of Australia's Index of Commodity Prices has seared +32.1 per cent higher than a year ago, thanks to surging iron ore and coking coal prices. 

Of course, the index is prepared on a monthly average basis using preliminary estimates.

When using spot prices for the bulk commodities (see the red dotted line) the index has gone absolutely ballistic, up by +15.6 per cent in November alone to be up by +61.9 per cent over the year.

Similar results in Aussie dollar terms, although movements in the currency have helped to smooth the journey through the mining boom to some extent. 

As for the bulk commodities index itself, using spot prices the index has increased by an outlandish +145.1 per cent since November. 

Quality forecasting!

It's partly valid to note that Australia hasn't benefited much yet from the explosion in prices, which may only be temporary, yet coal contracts have been signed at up to ~$300/t FOB (something which was basically unthinkable at the end of last year). 

It's not only the bulks that have been on a tear, a number of metals such as zinc have hit multi-year highs, with the base metals index up +26.7 per cent since January.

The oil price has also soared over the past 48 hours on OPEC cuts, getting December off to a flier. 

Of the main commodities in the index, only gold has been struggling lately. 

There's one other commodity that isn't officially captured in this index yet Australia nevertheless seems to have in abundance at times when it really needs it: luck!