Natural Resources Still Booming

Jupiter, FL (PRWEB) March 7, 2008

Sean Brodrick takes a closer look at natural resources and how prices have grown throughout the start of 2008. Mr. Brodrick examines the reason resources are in such great demand and where the demand is highest.

In 2007, gold prices shot up 36.6%, crude oil prices rocketed higher by 70.8%, and agriculture prices soared to new records. And they are continuing to surge in 2008. Gold, oil, coal, corn and soybeans are hitting new all-time highs and many other commodities are also marching higher. The natural resource boom is being fueled by double-digit GDP growth in India and China, which are both furiously building out their infrastructures and have billions of new consumers lining up to buy everything from clothes and cutlery to air conditioners and cars. In 2008, the world’s oil demand will rise past 1,000 barrels a second and oil companies can’t keep up. As for OPEC, don’t expect the cartel to increase supply anytime soon. Even, Chakib Khelil, the group’s president, recently said not to expect a boost in production.

As far as precious metals go, investor demand for gold is surging as investors try to hedge against inflation. One of the biggest funds that holds physical gold, the streetTRACKS Gold Shares ETF, now holds more gold than many central banks. And a new gold ETF is starting this year in India where 1.1 billion people will suddenly have a new way to buy the yellow metal.

China and India are changing their diets, a fundamental shift in global food supply/demand. Now their combined populations of 2.4 billion people want to eat like the U.S. To do it, they are buying U.S.-grown grain by the boatload. Global stockpiles of grain, the food held in reserve for times of emergency, are now sufficient for just over 50 days. This is already lighting a fire under prices on grocer’s shelves. According to commodities guru Jimmy Rogers, “The price of oil, the price of all commodities, are going to go much higher during the course of the bull market, and the bull market’s got another 10 to 15 years to go.”

“All this explosive demand is sending prices higher. And the price inflation is being supercharged by the Fed stabbing the dollar in the back. And with the U.S. dollar going down, it becomes a lot easier for hungry consumers in China to buy U.S. grain. The process is only going to accelerate, and the U.S. has the Federal Reserve’s easy money policy to thank for that. The more dollars they print, the less each dollar is worth. In that kind of environment, investors flock to hard assets. In fact, commodities have climbed 30% since September 18 when the first of five cuts in the U.S. benchmark interest rate sent the dollar lower,” Mr. Brodrick states.

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