Quote:
Originally posted by turbo6bar
Can the commodities market be sustained? Will slowing economies in some countries be offset by rising economies in developing countries?
I'm beginning to think a small hedge position in oil and gold, post correction, might not be a bad idea.
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It's complete crystal ball stuff and it would be risky to speculate....which is what many people are doing anyway.
But consider this: What is driving the demand for commodities is China and India, so one way to consider how long the demand for raw materials will go on is how long they will have to grow at the current rate until they reach a standard of living equivalent to the US.
There was a book I read a few years back called "the Paradox of American Power" by Joseph Nye. In it the author contended that is China expanded at the current rate their economy would surpass the US as the world's number one economy somewhere around 2070.
But as I mentioned above, when commodities get rare, people tend to find technological substitutes. History is full of them:
Whales got rare...so we learned to refine mineral oil.
Copper got expensive...so somebody got the idea for fiber optics
Couldn't get to the rubber plantations during the war...so butyl rubber was developed.
Freon was found to damage the ozone layer....so now there is CFC free Air Conditioning.
Land in Manhattan got too expensive....so they built skyscrapers.
So will the commodities boom go on forever? Certainly not.