Jim Rogers On Commodities

With China and India growing fast, famed investor – Jim Rogers, thinks the current commodities bull market has plenty of room to go…

HAI: What are the most pressing issues that commodity investors should understand?

Rogers: They should understand that until somebody brings on a lot of supply, commodities will do well. If people start seeing windmills on every roof and solar panels on every house, then maybe this [commodities boom] is coming to an end. If somebody discovers a gigantic gas field in Berlin, maybe this will start to change. Investors need to watch and see when and if new sources of supply develop.

But really, short of worldwide economic collapse, the best place to be is in commodities. There is no shortage of stocks. The world is cranking out new stocks every day. No one is cranking out new lead mines every day. People need to get a basic understanding of supply and demand, and then they’ll figure out what the big picture is, and they will make money.

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Gasoline at $4 Coming to a Pump Near You, Unfazed by Rising Tab

I paid 55 bucks to fill up my car this weekend.  That’s only going to cover 3/4 of a tank soon.  Looks like it is time to bulk up on Oil Company stocks.  That will more than cover the increased gas expenses.

April 23 (Bloomberg) — Whether it’s $50 to fill up your Prius or $130 for the Ford Expedition, $4-a-gallon gasoline is coming to a pump near you.

Fuel prices are rising at a pace not seen since Hurricanes Katrina and Rita knocked out a third of the U.S. oil refining industry in 2005. Gasoline consumption is climbing twice as fast as last year and will accelerate when summer travel begins late next month.

“What we’re surprised by is the increased demand,” said James Mulva, chief executive officer at ConocoPhillips, whose refineries from California to New Jersey produce 56 million gallons of gas a day, enough to meet 14 percent of the country’s needs. “Even though the price of gasoline is up, the demand is up,” he said in an April 12 interview in Houston.

Continue reading “Gasoline at $4 Coming to a Pump Near You, Unfazed by Rising Tab”

Oil Down 11% in First Days of 2007 – It’s Not All Due to the Weather

It has been a rather enjoyable winter here in Boston.  I know several people who still have their golf clubs out and are playing as much as possible.  Although, I am certain that the courses are empty today as there is a nice nip in the air.  Oil has been in a free fall since the summer. The powers to be were intent on getting gas prices down before the elections.  Lower gas prices, they thought, would translate into happy voters.  They were successful in reducing gas prices, but were still thumped in the elections anyway.  Oil prices have accelerated once again to the downside.  It started in mid-December and is down 11% in the first 8 trading days of 2007.  It is easy to blame the mild winter reducing the demand for oil.  However, that is only part of the story.

Continue reading “Oil Down 11% in First Days of 2007 – It’s Not All Due to the Weather”

The Dollar Thumped

Coincidental post election free-fall. What do you think?

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Martin Weiss writes some of the most compelling newsletter copy I have ever read. Although not a subscriber, I like to read his stuff whenever I come across it on the web. In his latest missive, he concludes:

This is the worst time to hitch your wagon to the Dow and the ideal time to profit from investments that naturally rise when the dollar falls. That includes …

  • Gold, gold shares, mutual funds and ETFs
  • Energy shares and ETFs
  • Select foreign securities and ETFs, especially in countries like China, still on track for near-double-digit growth in 2007.

Weiss’ latest

Commodities: Bust or Boom?

If you are a regular reader of this site – you know where I stand on commodities.  As far as I am concerned, investing in commodities is the “low hanging fruit” on the pathway to Financial Freedom.  If there was one thing that I remember for Econ 101 - it is that supply deficits with increasing demand leads to higher prices. Low and behold that is what we find in the commodity patch.  Take a gander at a quote from Jim Puplava. 

“For example in the past decade Asia has accounted for 50% of the increase in global demand for oil and 80 % of the demand for copper. Are we to believe that if the U.S. economy slows down, a new car owner in China will leave his car in the garage and ride his bicycle?”

Jim drives home the point with the following:

The perception in the financial markets is that a slowdown in the U.S. economy and a global economic slowdown will reduce demand for basic commodities. However, decades of neglect and supply deficits will take time and money to correct. This is a structural bull market, which is going to last for a lot longer than most experts predict. If China sells 2,000,000 automobiles this year and next that means there are going to be a lot more Chinese consuming larger amounts of gasoline. China’s economy may slowdown from its breathtaking rate of 11%. However, an 8-10% growth rate means more copper, more iron ore, more cement, more steel, and more gasoline consumption. Let us also not forget India, whose economy is growing at 9% per annum.

Remember Wall Street’s priority is to put the most money in their pockets.  That happens by convincing Main Street to purchase stocks in which it is most heavily invested.  Commodity related Exchange Traded Funds (i.e. GLD, GDX, OIH) are still relatively new, so there is little money to be made there by Wall Street.  By the time Commodities truly become a bubble, Wall Street will be pumping it 24 hours per day – 7 days a week.

Take a read on Jim Puplava’s latest commentary – “Commodities: Bust or Boom?”  It is a great read.

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