JREwing

Commodities: Bubble or Not?

May be we are just not used to the demand from countries like China or India.

When I was a kid, and I've seen something on TV from China, all I have seen on their roads were scooters and old bicycles. When I see stuff from there now, all I see is traffic jams with lots of cars. I don't know about you guys, but I always thought that the average car needs more raw materials and once it's on the road more gas than the average scooter or bicycle. Since it takes years to develop new mining projects (The Rio Tinto website has interesting videos on stuff like that) or oil fields, I asked myself: 'Why wouldn't commodities appreciate in price?' Just because Jim Rogers says it? Hardly. It is just supply and demand.

Of course there are speculators involved, including myself. But I wouldn't invest in commodities, if it wasn't making sense to me.

There were lots of people, who told folks in October, that this was a once in a lifetime opportunity to buy financials. I didn't, because it just didn't make sense to me. Luckily so. Financials obviously were a bubble, back then.

What I am saying is: Speculators may jump on booms like the commodities boom. But they don't cause it.

This commodities boom is for real. Just because we didn't have a boom in commodities for so long doesn't mean this is a bubble.

Think about it. The last hundred years or so the western nations enjoyed the mineral wealth of the entire planet. Is that normal?? It's not. On the contrary: I think the way it is today, is normal. Demand from all parts of the world not just demand in the west and supply in the rest of the world.

The fact that this sucks for us here in the west, doesn't make it less true.