Skjellifetti

Jim Rogers on the Next 10 Years

On Oct 11 12:06 PM Albertarocks wrote:

> But now for the first time in literally centuries, hegemony is being transferred to a country that is clearly and undoubtedly going to emerge as the leader of the world for the next few centuries.

Yawn. That is exactly what was being said about Japan in the 1980s. Look where they are now. Give it 20 years and we'll be saying the same thing about India.

Doesn't Rogers have a conflict of interest yammering about the virtues of commodities all the time given that he owns one of the indexes? I don't disagree that commodities belong in a diversified portfolio, but only at about the 5% level. Just like everything else, commodities have a tendency to regularly crash and burn and its usually just when you need their diversification benefits the most.

Commodity Conundrum Solved: The Hidden Parameter in Interest Rates

This just looks like a restatement of the classical economic theory used to explain finite resource extraction rates. If you are the owner of a finite amount of a resource sitting in the ground, at what rate should you mine the resource in order to maximize your long-run discounted profits? If you sell a marginal unit today, you can put the proceeds in a bank and earn an interest rate r. If you hold the unit in the ground, and sell it tomorrow, you have lost r unless the price of the unit increases by the same amount. All that the author is saying is that interest rates have a powerful effect on the owner's decision to sell the marginal unit today or tomorrow. Polaris and Georealist are quite correct in that the demand curve is the other half of the equation and is necessary for understanding why tomorrow's price may not be the same as today's. Shalom is correct, too, in that extraction costs change through time as does demand since higher prices are a powerful incentive for developing substitutes for any product.