Alex_G

Another Bullish Argument for Commodities: Demographics

Cam,

When you speak of demographics, you are looking at a long term outlook. Unless you are talking about commodities with limited supply, the increased supply will meet the demand. If it is profitable to mine or grow, new supplies will emerge. Remember semiconductors in the early '90s, houses in '03-'07ish? Capital will flow and produce the commodities, just like any other "shortage" where money was the only barrier to entry.

Another assumption you are making is that the emerging markets will continue to grow without pause. Big mistake. Look at the Asian stock markets, they are telling you something.

That leaves you with gold and oil.

Gold is more about fear (dollar and financial crisis) than it is about demand. Yes, i am told that Asians prize the metal, but at what cost? A house? A business?

Oil is another ballgame. The oil negative countries have been caught with their pants down by a confluence of events partially explained by BxCap above. Oil is up over 10x in the last 8 years. This price increase will have a larger effect on manufacturing based economies (eg. emerging markets) than on service based economies. This lofty price also makes the transformation to electricity that much easier and swifter. If oil prices stay up over $100 per barrel, you will see the developed countries sell more electric cars than gas or diesel by 2015.