On Commodities

I've always been perplexed by the price of commodities. It appears to me that there ought to be a bifurcation in the price: one part fundamentals, one part perceived value. I was lamenting on Bill Cara's website that I wish someone would dissect the price into these two parts. He stated that

Most commodities are actually futures (financial) contracts
with no intent to actually trade the commodities -- so the commodity
fundamentals are not nearly as important to the major capital pools as the
money flows from one currency to the next.

For a nascent student of capital markets, this was an "AHA" experience. I certainly understood that money flow is intrinsic to all asset classes and their valuations, but there was this underlying intellectual neediness to understand how one would parse between the two (fundamental v. technical) and come up with some definitive amount for the two. This question is precisely the type of question that someone with my background would ask (and go perpetually wanting) and really expect a logical answer. Job Cost accounting (blech...I hated it in school, and I still hate it, but I have to use it with my clients) teaches us to tease out discrete bits of activity and assign some value to it. But to tease out a fundamental value (demand/supply of the good) v. a technical value (demand/supply of the commodity from an investment attractiveness--meaning money flow!) is not going to happen.

I'm going to coin a new word: perplexion. It's like a contagion--it's an agent that causes perplexity! At first I was giddy thinking that I was clever and found a new word. While not in dictonary.com, I did a Google search, and look what I found (synchronicity at work). .

PERPLEXION

"The emotion experienced when comparing an image as seen by a camera,
with that seen previously through a viewfinder."

Totally irrelevant, but do take a look. http://www.perplexion.com/home.html Some cool pics.

I'll just co-opt the term for my nefarious purposes, and I stick with my original definition:

PERPLEXION

"An agent that causes perplexity."

It also strikes me as an intriguing name for a book or a band. It might also serve as an accurate name for important people in your life (spouse, partner, child, boss, colleagues).