Since the last two years the index of 24 commodities prices from oil to corn to aluminum, the S&P GSCI, has gained 45 percent.

Two years ago, a barrel of crude oil traded in the low $70s on the New York futures market. Crude closed yesterday at $114 a barrel, after touching almost $150 earlieer this year.

Speculation in commodities looks even more rampant today. Investors are betting on a never-ending world growth in demand for copper, three gasoline-wasting light trucks in every American driveway and perhaps widespread famine.

Financial experts in commodities say commodities generally will keep on climbing. We have heard it all before. Remember the Dot com bubble and the subprime securities with AAA rating!

Has anything changed this time around with commodities?  Why will this bubble not burst?

Because:
China has changed. India has changed. Southeast Asia has changed,” says Gartman, who once owned a seat on the Chicago Board of Trade and now publishes commodities advice five days a week from Suffolk, Virginia.

New Age Economies:

Flying Asian economies create an unprecedented demand for industrial materials and food. People in remote areas who see the good life on the Internet won’t accept their old life.

There can’t be a recession great enough in Asia to end the trend, Gartman says. “A recession in China is 15 percent growth in gross domestic product dropping to 9 percent,” he says. A recession in the U.S. might even be good for the markets, according to Gartman. It would keep demand for commodities within reason.

This doesn’t mean certain commodities won’t flop, Gartman says. There may be a bubble developing in rice, the staple food for much of the world, he says. Rice prices have jumped by about half so far this year and governments worry about running out. Gartman insists, though, that there is no “collective bubble” in commodities.

Here’s some logic in higher oil prices. The demand for energy in Asia is heady. Oil is priced in dollars and sellers demand more of them given the slump of the U.S. currency. But that doesn’t seem to justify crude oil’s rise from $94.65 a barrel at the end of 2007 to $115 a barrel it is quoting today.

Higher oil prices unfortunately boost the prices of farm crops, which used to rise and fall on the weather. Corn, sugar and soybean oil now can be used in motor fuels as substitutes for high-priced oil.

Nor is it a surprise that copper traded near its record $4.04 a pound set in 2006. It’s China again, demanding copper for plumbing fixtures and wire for its expanding economy. Still, was it realistic for Frank Holmes, chief executive officer at U.S. Global Investors Inc., to predict last week that copper would go to $8 a pound?

There’s a herd mentality here. Citigroup Inc. says global investors poured about $70 billion into commodities in the first quarter, bringing the total to $400 billion. Historically, such exuberance has led to market collapses.The big question remains ” Is the end for commodities bubble near?” Who can say ? Only time will tell.