$200bn Commodities "Super Cycle" Intact

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Bears are now poised again to end this year with bloody noses. According to an analysis by Daniel Raab, MD of AIG Financial Products Corp., investors have this year already placed $8bn into commodities, metals and related indexes.

For years bulls and bears have fought over the notion of a "super cycle" in commodity and metal prices. Bears are now poised again to end this year with bloody noses. According to an analysis by Daniel Raab, MD of AIG Financial Products Corp., investors have this year already placed $8bn into commodities, metals and related indexes.

He estimates that the figure for the full year could come in at about $15bn, aided by the launch of more exchange-traded funds (ETFs), and other passive investment strategies for commodities and metals.

The unprecedented flow of funds into commodities, metals and related indices is consistent with the theme developed over the past few years by the likes of Alan Heap at Citigroup in Sydney, Melbourne-based Peter Richardson, London- based Michael Lewis of Deutsche Bank, and Goldman Sachs' Jeff Currie in London. Citigroup has defined a super cycle as a prolonged (decades) trend rise in real commodity prices, driven by the urbanization and industrialization of a major economy.

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