The Next Commodities Boom: Around the Corner?
With many investors worrying daily about the rough rides of the major stock exchanges, is there any hope on the horizon?
Yes, Virginia, there is a Santa Claus.
Let’s not forget that more than 3 billion people in China and across Asia are consuming natural resources like never before!
Check these UN stats:
- China’s crude oil imports alone have just soared a whopping 18% to over 3.6 million barrels per day. In fact, China is the third-largest importer of oil in the world· Coal, which supplies nearly two-thirds of China’s energy, rocketed to 2.5 billion tons of oil equivalent in 2006.
- Personal consumption is exploding on the mainland. Among the four most basic commodities — grains and meat, coal and steel — Chinese consumption has already eclipsed the United States
- China's grain consumption hit a record 517 million tons in 2007.
- China’s annual meat consumption per person surged to 50 kg last year, from 20 kg in 1985.
- Steel use in China is also now more than double that of the United States
Fast on China’s heels is India:
- Among India's one billion people, a rapidly growing segment is now modernizing, with a GDP growth rate of 8.4%
- India's GDP is now surging to $906 billion. And after adjusting for its lower purchasing power, India's once-backward economy has become the world’s third-largest economy, in terms of purchasing power parity.
- Retail sales are exploding, at $350 billion and expected to double by 2015.
- India's purchases of passenger vehicles are expected to double to 2 million a year by 2010.
Bottom line: India's rapidly growing economy will drive energy demand to a projected annual growth rate of 4.6% through 2010 — the highest growth rate of any major country on the planet, even higher than China's.
If you take a quick look at some energy stocks, you had hoped that you did invest in them:
- Peabody Energy (BTU) is up 799%
- Diamond Offshore (DO) is up 519%
- Valero Energy (VLO) is up 462%
- Toreador Resources (TRGL) has risen 196%
- Detrex Corp. (DTRX) is up 367%
Aluminum prices are near record highs ... copper is more than 456% more expensive than it was in 2003 ... nickel, rhodium, zinc — you name it — the price of nearly every base metal is soaring. It’s an axiom in the United States that a falling dollar means rising prices for gold, oil and other natural resources — as far as the eye can see!
The value of the greenback has been plunging for more than three years, ever since the Federal Reserve started pumping in money post 9/11. Now it’s getting even worse, courtesy of the real estate and mortgage market meltdowns. The Fed has no choice but to print money with reckless abandon to try and boost the economy. In fact, the Fed continues to pump billions of fiat money into the U.S. economy.
Problem: The “funny money” being pumped in is not backed by any tangible assets. It’s just more money and credit. And when the supply of money and credit increases, the value of the currency falls. It’s as simple as that.
- Corporate debt loads have increased to a staggering $6.3 trillion.
- Consumer debt in the United States has swelled to nearly $2.5 trillion.
- Credit card debt is also at record highs. Americans owe over $940 billion on their credit cards.
And Washington's debt: More than $9 trillion and rising at the rate of $1.72 billion per day. That's the equivalent of $31,136.44 of debt for every man, woman and child in the country. It doesn’t include the unfunded corporate pensions ... government employee pensions ... the potential liabilities in the trillions of dollars of derivatives traded daily ... or the unfunded liabilities in Social Security or Medicare. Add up all these debts and you're staring at a Space Needle Tower of more than forty-three trillion dollars of debt.
All this means that the Fed must pump more and more money into the system, to devalue the dollar and ease the burden of all these debts by “inflating” them away.
The overwhelming debts in the United States, coupled with the strong probability the U.S. dollar will continue to fall, is one major reason natural resource prices and inflation are headed higher.
Investors, expect a new boom in the price of commodities.
Disclosure: none
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This article has 6 comments:
- User 260582
- 1 Comment
Sep 12 05:31 AMRead the book about the Bilderberg group and a lot will become crystall clear. One understands immediately the bail outs favoring certain financial institutions, as JP Morgan, Bank of America, Goldman Sax (read families). Who were the banks that build up 'HUGE"short positions gold end of July, start August?"They"... start wars whenever necessary, they will sacrifice people, even their own?!?!, everything based upon power and greed. What a shameful world. So prudence is required for the individual "small"parti... in the financial markets.
Regards from St Tropez
- Hot Gurgaon
- 1 Comment
My Website
Sep 12 07:03 AM- cjct
- 46 Comments
Sep 12 07:36 AM- JasonC
- 341 Comments
Sep 12 01:30 PMcan't put this bubble back together again.
Will there be another round of a commodity boom? Sure. In 15 to 20 years...
- Think-About-It
- 89 Comments
Sep 12 04:11 PMDisclosure: long CYB
- Realsit
- 72 Comments
Sep 12 04:14 PMcan't put this bubble back together again."
---would you be refering to the housing bubble? The government deficit? U.S. houshold debt? The failing U.S. big three auto manufacturers? Bear Stearns? Lehman Brothers? Our entire debt-based economy?
Oh that's right, we are trying to patch those bubbles up.
The only things real right now are those basic things we must have as a functioning society: energy and food. And those are no bubble. Those who don't believe this are still living in the illusion of a perpetual growth-driven economy and fail to see the limits of our planet. The gapping hole in mainstream economic theory is scale. We are living in the perfect economic storm: the end of cheap energy, a decimated financial system, and a precarious global geopolitical state. Those who don't see and understand these factors fail to see what's really happening.