The evidence that resources, especially energy, are running low is pretty clear, at least to this trader.
Learning from the Past
At the start of the new millennium 11 years ago we saw the oil and agriculture markets begin a more or less steady climb higher, at least until the global recession and pullback in 2008. The economic collapse sucked the wind out of the sails of most commodities, and everything else for that matter. But the climb continued and has continued even through the latest global economic meltdown.
Personally, I think we are about halfway to the new top for many commodities. That means oil could easily hit $200 within the next three years and gold could reach $2,500-$3,500, if not much higher. Rare earth elements are probably one of the best longer-term markets right now. The agriculture markets have even further to go, in my opinion.
There is so much incredible opportunity for investors right now. And the one thread all these commodities share: They all depend largely on energy for production, transport, processing, and so much more.
The Stages of Grief
Specific commodities are becoming more and more scarce …that is obvious. Therefore we can expect to see more suffering in the poorest countries first. Then the economic impact will work its way up to the middle class and wealthier nations.
The facts are fairly grim if we look at them closely. There is going to be less of everything, especially energy. Yet there will be more people who want those things. Just look at the number of Chinese and Indians who are driving now. And the rate they are adding vehicles to the road is mind-blowing! Let’s face it — wars have been fought over far less.
In her famous book, On Death and Dying, Elisabeth Kubler-Ross describes the stages of grief:
- Denial: “It can’t be happening.”
- Anger: “Why me? It’s not fair.”
- Bargaining: “Just let me live to see my children graduate.”
- Depression: “I’m so sad, why bother with anything?”
- Acceptance: “It’s going to be OK.”
In my opinion, the American public is going through the stages of grief right now. Rising prices are just a market-based signal that we are losing our economic and resource abundance. As the American dream fades away, it’s like a death in the family.
While the global recession and credit crunch have severely impacted global demand for energy, it’s only temporary. They may just be a bit dormant at the moment, but facts reveal that the world’s problems haven’t gone away. Most likely, they’ve gotten worse!
So one thing is for certain, investing in energy is about as sure a bet as an investor can make.
The problems that propelled oil to $147 haven’t gone away.
The idea of a world that no longer requires fossil fuels is a dream that is most certainly a long way off. And while there is still plenty of crude oil, it’s getting harder and more expensive to find, extract, and refine. This can all only lead to one thing: Higher prices.
Investors can use many excellent individual oil company stocks, drillers, and more. Names including Exxon Mobil (NYSE:XOM), Halliburton (NYSE:HAL), and Nabors Industries (NYSE:NBR), just to name a few. Or you can choose to trade the big oil ETFs, such as the United States Oil Fund (NYSE:USO).
In addition to these great ways to play energy prices, I like ETF options, which give you an added bonus: Limited risk.
They’re the tool I use to help my Master Trader members seek gains in any major asset class in the world — energy, stocks, precious metals, commodities, bonds and even foreign currencies — no matter what event or trend is happening in the world!
To learn more about ETF options and how you can become a Master Trader member, risk-free, click here.
Yours for resource profits,
Money and Markets (MaM)is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaMare based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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