The commodity super cycle, which culminated a 25-year bear market decline in commodity prices in 2001, has now turned up as evidenced by a 100%* rise in the Commodity research bureau index of commodities since October of 2001.
This is the tip of the iceberg as emerging economies of Brazil, Russia, India, China and the former eastern European satellites of Russia join the global community. Three billion people entering the global workforce, looking to climb the economic ladder. Competing for the natural resources necessary to build out their countries, infrastructures and businesses. This incremental demand on top of virtually no excess capacity is creating once in a multi generational opportunity. However, what these commodity market moves mean to the global financial community (Stocks, bonds, and Currencies) is another story as increasing costs and inflationary pressures are squeezing profit margins and putting pressure on interest rates.
To complicate matters the world is awash in Fiat “faith based” currencies, the result of the closing of the Gold window by President Richard Nixon. Now, all major currencies in the world are backed by “nothing” other the full faith of the respective issuing government. Most of these aforesaid Governments are awash in liabilities, funded and unfunded which require a steady dose of inflation to reduce future liabilities. In addition they are issuing new debt and “fiat money” at an unprecedented pace. Although Fiat currencies have been tried many times in history, they have “NEVER” succeeded as politicians and bankers have always succumbed to the siren song of being able to print wealth. Like the ancient alchemist who tried to turn iron into gold, it never worked. Examples of this can be seen littered throughout history, such as the German Weimar Republic Argentina, and India. People hauling around money in wheelbarrows, it always ends in tears.
These massive fundamental forces are creating opportunities in all markets, long and short. There will be massive moves up and down depending on the market forces affecting that particular market sector. These opportunities require professional management, both to capture opportunities* and manage the risks* involved. Thus, Alternative Investments are emerging as the answer to this unprecedented volatility, as the potential to make investments and profit* in declining and rising markets provides the global investing community a vehicle for their investment portfolios.
* Past performance is not necessarily indicative of future results. The risk of loss in trading commodity futures can be substantial.