Commodity Shortages Ahead

The rapid industrialization of China and India continue.

While we should be happy that the living standards in these countries have been increasing we should also be aware that extreme demand pressures in the face of declining supplies will put upward price pressure on many commodities for at least the next several years and perhaps much longer.

The following is from the Daily Reckoning news letter service:

“the entire world can’t get enough copper, zinc, lumber and oil. But bringing on new production takes time. Supply can’t catch up with demand overnight. In fact, it’s going to take quite some time, especially when you throw the consumption potential of India and China (37% of the world’s population) into the mix. Consequently, commodities, the market for the essentials, will remain tight for the foreseeable future. ”

Of course, markets do not move in a straight line, especially commodity markets. However, the long side of markets like copper, lead, gold, silver, lumber, and oil should be favored for many years to come.

That means buying or adding to positions on price corrections, and looking for the bull market to continue for a long time to come.

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