It depends on the supply and demand. And we have had a dearth of supply. Nobody has invested in productive capacity for 25 or 30 years now. The inventories of food are the lowest they have been in 50 years and you have a shortage of farmers even right now because most farmers are old men because it has been such a horrible business for 30 years.
And as for metals, nobody can get a loan to open a mine as you know. Who is going to give you money to open a zinc mine? It takes at least 10 years to open a mine so it's going to be 15 or 20 years before we see new mines come on. Nobody has been opening mines for 30 years and they are not going to. And in the meantime reserves are declining.
As for oil, the International Energy Agency came out recently with a study showing that oil reserves worldwide were declining at the rate of 6% or 7% a year.
That does not mean that if suddenly the U.S. goes bankrupt that everything won't collapse in price. But I would rather be in commodities because it's the only thing I know where the fundamentals are improving. They are not improving for Citibank or General Motors but the supply situation in commodities is such that when demand comes back, then commodities are going to be the best place to be in my view.
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Yes Sir, no doubt. However - what is the timeframe. What happens if we have scenario for Japan - but global. Japan had good situation - because surrounding world was OK. Today it will be global recession / depression. How much time - 5 - 10 - 15 years? Armstrong and others say it might be 23 - 26 years.
ReplyDeleteDear Mr. Rogers,
ReplyDeleteI always like your posts, your comments, your intelligent advice and your fundamental long-term view. I estimate that you are a more human investor than almost any investor in the world.
But how is it possible for the average investor to (easily) invest in a basket of real commodities (without gold) without taking them at home?
The only things that can be found generally are funds, certificates etc. containing shares of commodity companies or hard to understand financial derivatives. But there is not one fund containing real, hard commodities. For me it is not clear if they really invest in something like commodities or an equivalent or they pretend to do.
I think if commodities start a rally they will do not before most of such ´commodity´ based products will have been beaten down by the market.