Wednesday, November 07, 2007

Investing in Commodities

I have long argued for commodities as an investment object, a recommendation that have certainly been vindicated by the commodity price rally. Some may think it is too late to invest in commodities now, but I don't think so. The fundamental factors driving the commodity price rally remains in place.

The factor I have been highlighting most on this blog is the Fed's monetary policy , which has helped push up commodity prices for a number of reasons, not least as it lowers the U.S. dollars foreign exchange value, but also as money supply increases will raise the most flexible prices to a disproportionate extent. And that factor will continue to push up particularly the U.S. dollar value of commodities as mad "Helicopter Ben" continues his inflationary policies.

Moreover, in his new book, Hot Commodities-How Anyone Can Invest Profitably in the World’s Best Market investment super star Jim Rogers lays out a number of non-monetary reasons for believing in a continued commodity price rally for several more year. I won't elaborate on these arguments here and now, and will instead do so in a full review of the book which will soon be published. For now, suffice to say that capacity growth in commodity extraction is trailing growth in demand from particularly countries like China and India, and will likely continue to do so for a few more years.

Meanwhile, I see that even some Swedish news outlets start to offer read detailing practical how-to tips on how to invest in commodities.


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