Presently, about 1 billion out of the world’s 6.5 billion people are active participants in the global economic system. By 2050, we expect there will be 2 to 3 billion out of a world population of about 8 billion who are frequent consumers, savers, and investors.
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Posted On : Wednesday, June, 16, 2010 BASE METALS Author's: Monty Guild & Tony Danaher
As some of our regular readers have noted, we have not recommended base metals for months. We have recently received some emails about base metals and our position on them. We remain bullish on gold and oil, but we are not currently bullish on base metals. We think the current rally in base metals prices is a good time to sell.
Why do we take this stance? We are fundamentally driven analysts and we believe that a deflationary depression or a damaging inflation are both equally probable within the next two to seven years, especially in the over-levered developed world.
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EMERGING MARKET GDP GROWTH: THE PAST TWO DECADES, AND OUR PROJECTIONS FOR THE NEXT DECADE
According to the IMF, World Bank, and the United Nations’ historical data, GDP growth rates have varied widely for emerging markets over the last fifty years. We will focus on the past twenty years from 1990 to the present so that we may draw conclusions to help us project future growth in the developing world. Once we are able to make an educated guess of the GDP growth, we will be able to compare it to the more thoroughly analyzed and widely predicted growth expected for the developed world.More...
The second quarter was very eventful. European sovereign debt came under suspicion, and many waves of fear flowed through global bond, currency, commodity, and stock markets.
The source of this anxiety and fear was the projection of future economic activity. Global bond, stock and commodity markets are a discounting mechanism of future events. They rise and fall prior to economic events which shape business activity in future years.
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DOES THE OIL LEAK IN THE GULF OF MEXICO HERALD A BIG DISCOVERY?
Let us look at the oil spill from another angle. Among oil industry watchers there has been a great deal of information about the size of the field under the big spill. Respected industry watchers have said that there is good reason to expect that the field extends many miles deep underground and horizontally from the site of the spill.
In the past few years, seismic studies and drilling results from deep beneath the Gulf are leading many informed sources to believe the total oil available under the Gulf of Mexico, in the area around BP’s Macondo well (which was originally expected to have about 50 million barrels of recoverable oil) may contain billions of barrels of oil. It is early to make an informed analysis, but the Macondo well blowout may indicate that these Gulf of Mexico fields, located in deep water about 50 miles offshore and under another 20,000 to 35,000 of rock below the seabed, represent a massive oil discovery.
The costs of exploitation will be huge (and already are), and it will probably be decades, before the oil can be brought to the surface, but they may do a great deal to help the U.S. attain energy independence.
We are carefully watching the developments to determine the size of the find. It is safe to say that the oil in and underneath the Gulf of Mexico will have profound long-term consequences for U.S. energy policy. Despite the ongoing tragedy of the Gulf oil spill, the reality is that these resources are likely to eventually make it to market. More...
In Part I, we discussed the history behind the current worldwide de-leveraging, which is the primary factor determining today’s economic landscape. In Part II, we explored the reasons for the current market volatility, and discussed the current game of tug-o-war between two contesting sides; those who anticipate a deflationary depression and those who anticipate inflation. As the contestants pull the rope in one direction and then the other, the market becomes volatile and fear spreads as both sides shout their views from bullhorns. Both Part I and Part II are available below.
Today’s installment, we will discuss potential influences which may tilt the playing field allowing one side or other to gain an advantage in the tug of war.
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