30th March 2006, 06:01 AM
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Member
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Join Date: Jan 1970
Posts: 2,428
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Hi Duritz,
You mentioned the commodity prices may fall.
The only way they will fall is 4 main things over the next 2 years is.
1)The new emerging country , China suddenly stops expanding (unlikley)
2) America lowers their consumption for stuff for things to run (unlikley)
e.g. they use 40% of the world oil resources just to run around in circles.
Their society revolves around consumables.
3)That there is an explosion of new mining companies cropping up on the seen all up & running , all at the same time, selling stuff at a lower price (wont happen over next few years because it takes a long time to get just one of those things operational let alone profitable.)
4)The large companies stop buying up their competitors (Large companies have been doing this over the last year or so e.g. the largest gold producer now controls 40% of the world market. BHP have done similar things.
So if the few large companies control most of the production ,that could also mean they contol supply & if one controls supply , one controls the price to be paid.
Big companies now mainly invest in new projects with cash saved after dividends paid & not so much with borrowed money . This means more secure returns for investors & less risk for the company.
So ...
I beleive we will see a new surge in commodity prices over the next 12 mounths .
Copper ,odly enough, is the benchmark other commodities follow as their guide . This is tracked on the London stock exchange very closely , it has just broken through the resistance curve for a new record high after massive profit taking in the beginning of the year, which is recognised as an indicator for other commodities to rise. Known as a Bullish market.
My tip..
Buy into a manged fund called Colonial First State -Global Resources Fund.
Min investment $1000
Assert rating 4 stars (2nd highest rating for security)
Risk is spread over more than 60+ world wide Blue Chip mining companies.
One can have some or all their Superannuation placed into it , just by asking your fund manager , including the one at work , to do so.
Last year it went up 60% & indicators show it may get close to that again.
Because of the big players have more control over market prices from their opposition & are in a stronger position to guarantee the needy supply.
e.g. No point a smaller company having lower prices if one cant guarantee supply.
(Seek professional advice before doing so )
Cheers.
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Cheers.
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