Natural Resources

[[wysiwyg_imageupload:1058:]]By Gary Dorsch

In 2009, China spent $89-billion for imports of crude oil, $50-billion on iron ore, and $30-billion on copper. However, even before the final tally for 2010’s import bill is calculated, Beijing understands that the era of cheap commodities is over, and that if continues to target economic growth of 9% or more, it’ll have to pay a heavy price. Beijing has been backed into a corner, by the US Treasury, and its powerful allies at Japan’s ministry of finance, and must soon decide how to navigate its economy in the year ahead. The threat of hyper-inflation looms on the horizon.

[[wysiwyg_imageupload:1024:]]By Jeb Handwerger

What is so rare as a day in June, the poet asks? The answer..a sector in play, on a perfect day. The rare earth sector is experiencing an explosion of investment interest as China continues to place restrictions on Rare Earth Oxides (REO).

Resource investors are drooling over the potential price explosion like Homer does for donuts. Every year around this time a new craze emerges to capture the imagination. We lived through "hula hoops", "beanie babies" and "cabbage patch kids". Now rare earths have become the latest "must have" for the holidays.

[[wysiwyg_imageupload:982:]]By David Coffin

Preface Comments:

It doesn’t matter if you’re naughty or nice; Santa has been coming early to resource investors everywhere this year. A somewhat ironic combination of fear buying in precious metals and fearless buying in most everything else has generated gains across the sector this month.

In fact, the gains were good enough to have us checking the numbers on many development stories to make sure we were not wearing rose coloured glasses. We were mildly surprised to find that many stories looked, if not cheap, then at least like they still had headroom. That is a testament to just how good metal price moves were this month.

By Steve Saville

Our view is, and has always been, that the rapid economic growth occurring in countries such as China and India is NOT the primary driver of the long-term bull market in commodities that is often referred to as the "commodity supercycle". Instead, we see the bull market as mostly an effect of inflation, where inflation is defined as an expansion of the money supply. One of the consequences of inflation is a reduction in the value of money relative to some of the things that money can buy.

By Black Swan Capital

Hopefully you know by now. In fact, it would have been nice to know a month ago ... or better yet six months ago (or even better yet two years ago!) ...

That's when copper started up. And today it's challenging record highs after screaming higher so far this month. (The previous peak was early 2008.)