And the naysayers

David Pauly from Bloomberg writes that the commodity markets must be near a peak because he thinks everybody is invested there.

Analysis: As usual the media gets it wrong. Has there been more intrest in commodities? Absolutely however as Jim Rogers pointed out there has been no investment in any infastructure or capacity in decades. Yes producers will react but it takes time to build a mine (10 years or more depending on the local) and as Rogers has pointed out, even if a large oilfield was found it would take years to bring it online. I think there will be corrections along the way but this thing is going to levels that will make the internut and housing bubbles look sane.…

Gold makes new high

Gold PriceGold reached another new high today. Anaysts say it is asian buying. I have a theory on what is going on, I think asian central banks are moving out of the dollar. I am of the opinion they are buying anything tangabile while they still can. I base this on some news I heard today from published minutes from the last FED meeting. Apparently the FED governors believe “that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy.” Oh boy, if they really stop raising rates the dollar will collapse, can you say hyperinflation. So it would make sense that foriegners, who hold trillions in our dollars, would want to get something of value before the FED devalues the currency. Overall a good day for our stocks I hope you are enjoying the ride.…

China to continue commodity bull

The reason for this revisit to the “BRIC” story is the enormous amount of press about the “burst bubble” in commodities this month.  It’s an important, some might say, critical, topic.  How we should act and react in the market is intimately related to the type of market we are in.  Viewed in isolation, a bear market rally will look pretty much like a small piece of a bull market rally.  But while you might be looking for periods of weakness to accumulate positions in a bull market you’d be much more likely to be watching like a hawk for any weakness as a sell signal in a bear market rally.

Much of chatter recently focused on “unsustainable” growth in China.  This is said to prove the point that commodity prices have to fall.

We won’t know just how long China’s (or India’s or …) secular expansion lasts until it’s come to an end.  What we do know is that if it looks like recent periods of above trend growth in the region, namely Japan and South Korea, it will last for at least 25-30 years.

This is not wild eyed optimism.  Similar growth periods moving through mass industrialization in both Europe and North America had similar time frames.   That is about how long it takes to move to and through the process and to upgrade infrastructure (both public and private) to the level where it becomes sustainable.   There is absolutely nothing unusual about the length of the China expansion and we expect the one just starting in India will fit the pattern as well.

Analysis: We can see the historical patterns or generational growth and infastructure buildout ie Japan and South Korea. We can reasonably say the same dynmaics will play out in the BRIC countries thereby underpinning long term commodity prices. Once Wall Street figures this out we should a revaluation of the commodity stocks.…

Housing not stable

Comstock Partners:

Widespread reports that the housing industry is stabilizing are just too incredible to believe.  Affordability remains at a 15-year low; inventories are at record levels, new housing permits are plunging; and industry executives are telling us every day how bad things really are.

Foreclosures in dallas highest sine 1980’s oil bust.

Dallas Morning News:

 Home foreclosure postings in the Dallas-Fort Worth area have surged to their highest level since the 1980s.Nearly 4,000 homes in Dallas, Tarrant, Collin and Denton counties have been posted for possible sale in November, up 49 percent from the same period a year ago.

“It’s high, much higher than normal,” said George Roddy, president of Addison-based Foreclosure Listing Service, which compiled the data.

Fueling the foreclosures are interest rate hikes, rising living expenses and consumer debt, and aggressive lending practices.

Home foreclosure postings reached about 35,300 so far this year, increasing 20 percent over the same period a year ago. That figure has already surpassed the total for 2005, which was about 32,500.…