27 April 2011

Commodities Outlook April 2011: Credit Suisse

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Commodities Outperformed Most Asset Classes in 2010

And the Story for Commodities Remains Compelling
􀂃 Demand remains strong.
􀂃 QE and low interest rates continue to encourage investors into real
assets.
􀂃 The weak dollar is supportive.
􀂃 Continued uncertainty is likely to continue to provide support for
gold.
􀂃 Tight commodity markets will react significantly to any further
supply disruptions (tail risk).


Determinants of Commodity Demand
􀂃 When thinking about demand for many commodities, there are two
main components.
􀂃 Global Industrial Production provides a good proxy for demand for
commodities used to make goods.
􀂃 Global Fixed Asset Investment is a good proxy for demand for
commodities used in the construction process.
􀂃 In addition the impact on price is a function of both the level of
demand and the rate of change.




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