A Commodities Bull Market
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(Jim, the biker) Rogers goes on to explain that the long-term bear market in natural resources
ended some time ago and that "we are in the early stages of the new multi-year bull
market—just as unrecognized as was the beginning of the stock bull market in the early, mid
and later 1980s." According to Rogers, he started a "Natural Resource Index Fund" in August
1998 and "it is up 50% since then, yet Kudlow, CNBC, et al keep saying there is no inflation
and the New Economy will protect us." (Rogers concludes that the commodity markets are
where stock markets were in the early 1980s—at the beginning of major long-term upward
moves—and that he is "very bullish on natural resources" (the unleveraged futures, not the
stocks). He says, however, that he is the least optimistic about gold, which he plans to buy
once the central banks, which are now run by MBAs and academics, panic and dump it in that
old-fashioned selling climax.
Now, I am not suggesting that Jim Rogers will be unconditionally right, but if the global
economy continues to grow as a result of aggressive easing by the Fed, it is entirely possible
that this next easing won’t boost the Nasdaq, as Mr Greenspan seems to hope (the S&P 500,
ex Technology, being at an all-time high, certainly doesn’t require any support), but that the
side effect will be a pick-up in the commodity markets, which have been in a bear market for
more than 20 years. This should be so because if, as Gaveco argues, end consumers have yet
to be saturated with tech goods, then they will also have to be saturated with food, energy
and building materials. In this respect, it’s interesting to note that the CRB Index has been
performing quite strongly given the deceleration in the U.S. economy.
Therefore, if the optimists about the global economy are right, I would like to make the case
that Jim Rogers’ bull market in natural resources might be a distinct possibility and that a rise
in commodity prices will squeeze the profits of a number of industries, including high tech,
whose products are badly deflating.
Strategic Investment (US$299, 12 issues), 1217 St. Paul Street, Baltimore, MD 21202
(02/01) |
