The Panama Insider Reports September 5, 2012 Expect Commodities prices to go down, Invest in precious metals and Get a multi-currency bank account with Yuan Predictions: Panama planning- The bank account that accepts Yuan or any other basket of currencies will do very well in 2013. The companies linked in to the digital mobile money real-time transactions market will boom in 2013 along with everyone in the business community associated with it. Factors: Commodities prices are falling and in a long term down trend. China is bullish on precious metals, while the Fed continues to loot the Americans who will â€˜by any means necessaryâ€™ try to save the dollar, even take us to war with Iran. Americans feel the free for all coming. Everyone needs the Panama Canal, and I expect to see decline on Canal transit. The ACP would do well to prepare now. The Panama Insider can help. But what about commodities? Now we turn to the other piece of the puzzle. Most people wouldn't care a whit about China's economy. They care because China is such a big user of commodities and has such an impact on world prices. A growing China is a key to the commodity bull market. But the commodity bull market is long in the tooth. It started in roughly 2000. (Jim Rogers and others date it from 1998.) So the bull market is at least 12 years old. The average lasts about 17 years, according to Jim Rogers' book Hot Commodities. However, this one may already be beyond what's normal. A reader sent me this chart on commodity prices from BCA Research and Allan Gray: ---------------------------------Advertisement---------------------------------------
What this chart shows is that the long boom in commodity prices over the last dozen years has pushed commodity prices more than two standard deviations above their long-term trend line. In other words, we're in outlier territory. As you can see, not too many past bull markets have pushed much beyond where we are now. There is another important point about that chart. Commodities, despite what you hear, are a poor way to preserve wealth over a long period of time. As Ian Liddle of Allan Gray notes: Importantly, the long-term trend line is down. This is a testament to human ingenuity. Over the last two centuries, we have constantly found new and moreefficient ways to produce and use commodities, and this has driven prices down over time. The new technologies to access America's considerable shale gas reserves are the latest example of this. We believe it would be a mistake to simply extrapolate the strong rise in commodity prices over the last decade far into the future. I don't think this dynamic is somehow suspended in our own times. Commodities will continue to fall in real terms â€“ that is, adjusted for inflation â€“ over a long period of time. I think we've turned, or are turning, another corner. We should expect lower highs and lower
lows on most commodities (in real terms) as the commodity bull market unwinds. It will affect everything from iron ore to oil. (I exclude the precious metals, on which I remain bullish.) If the bull market is, indeed, over, we have to change the way we look at investing in commodities. Commodity stocks have to clear different hurdles than in the last dozen years. We should not count on increases in commodity prices. Stocks should work at existing prices… and lower. I would favor picks-and-shovels plays over producers. This is the way I plan to play it. It's the safe way to go. If I'm wrong, I'll be wrong for a year or two as the commodity bull takes its last breaths. But then, so what? There are plenty of other ideas to invest in. The truth is that the end of the commodity bull market is coming. It seems too risky to try to and call the exact top. Start playing it safe now. Start preparing today. Good investing, Chris Mayer Editor's note: Chris Mayer is the editor of Capital & Crisis, a monthly advisory considered required reading around the DailyWealth offices. Chris consistently provides contrarian investment ideas you won't find anywhere else. Click here to learn more. Further Reading: In February, Porter introduced readers to China's ongoing and enormous accumulation of gold… a plan that could allow it to replace the U.S. as the owner of the world's reserve currency… "I know this will all sound crazy to most folks," he wrote. "But most folks don't understand gold… or why it represents real, timeless wealth. The Chinese do." Read his four-part series here… How the Chinese Will Establish a New Financial Order The Largest Gold-Accumulation Plan of All Time How and Why China Came to Dominate the Market for Gold How China Plans to Change the Way Gold Is Traded
Published on Sep 5, 2012
The article draws a case for investment strategies: Ours might be to consider having a digital solution for how to help the commodities mark...