2009 Best Year for Commodities Since 1973

SINGAPORE (Reuters) - Commodity markets are on course for their strongest year since 1973, lifted by oil’s biggest annual gains in a decade and a 140 percent surge in copper prices.

With the Reuters/Jefferies CRB index .CRB on track for a 24 percent rally in 2009, gold heading for its ninth increase in as many years, sugar near record highs and cocoa headed for its fourth annual rise, traders are describing 2009 as “the year of commodities”.

The U.S. Must Develop Its Resources – Only Congress Stands in the way of the Abundant Copper, Gold and Silver in the U.S.

Finally there is a semblance of sanity in Washington. Alaska’s Senator Lisa Murkowski (Republican, Alaska) the ranking member on the Senate Energy and Natural Resources Committee recently presented a Congressional briefing on our pending resource dependence. In her briefing, focused on clean energy, Senator Murkowski said:

“Our most difficult challenge may be our most fundamental: ensuring a stable supply of the raw materials needed to manufacture clean energy technologies in the first place.”

The clean energy (note the Senator’s refreshing use of “clean,” not “green”) issue provides a necessary focal point on US natural resource dependence. Till now a powerful environmental lobby has hijacked the extractive resources industries. Claiming that the Mining Law of 1872 is antiquated they are insisting, and Congress is following meekly not wanting to offend, that all domestic mining and natural resource extraction should be halted. This trend is not new; the current administration in Washington refuses to allow development of off shore oil and gas resources. The Secretary of the Interior recently issued a two year moratorium on new exploration and mining of uranium on the Arizona Strip. These are some of the highest grade uranium resources in the country. Twenty million pounds of uranium were mined on the Arizona Strip in the 1980s with no environmental impact whatsoever.

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Say Goodbye to Paper and Hello to Physical Commodities

A looming crackdown in the commodity futures markets is arousing investor interest in the real thing.

Facing a limit on holdings in paper futures contracts, bankers say they have received inquiries from pension funds and other big investors about the practicality of warehousing industrial metals or chartering supertankers.

The inquiries raise thorny issues for the US Commodity Futures Trading Commission as it devises constraints on holdings of energy futures after last year’s surge in oil prices. Gary Gensler, chairman, has said he wants position limits to be consistently applied across commodity markets.

Critics say investors could respond by bailing out of futures and hoarding actual commodities, an ugly prospect in the event of a global shortage. Neither the CFTC nor the UK Financial Services Authority has jurisdiction over spot commodity markets.

Explosion in the Price of Gold Imminent

These thoughts are nothing new here at BabyBullTwits as we have believed for quite some time that the price of gold was poised for a surge.  With September upon us, and it being the best performing month for gold, more and more is written of this metal along with predictions for the future.  Below is an excerpt from a six month old interview with John Embry, Chief Investment Strategist at Sprott Asset Management.  

According to Mr. Embry ”I think the major development is going to be ongoing issues of currency debasement. The value of paper money against real tangible assets is going to fall considerably. Right now, we are going through this deflationary scare. It won’t last. It will change into a hyperinflationary environment in the not too distant future.”

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The Commodity World is Growing in Strength

The commodity market is bub­bling. Whether it be sugar reaching a three year high, copper and other base metals reaching almost one year highs, or oil and gold rising further. The markets are looking good.

They’re moving up on signs that the global recession is easing. This is boosting demand, especially in China and Asia, which is pushing prices up.

Tangibles are growing in strength. From the metals, natural resources, energy and food, these markets are rebounding strongly and they’re poised to continue rising in the years ahead. Demand is the driving force, making commodities a power­ful market.

The Chinese are astute investors. They’re buying up lots of hard assets and commodities for infrastructure, and they’re using their dollar re­serves to buy these goods.

The world is on sale and China is the main buyer. The Chinese have already been focusing on re­source rich developing countries, and less on monetary investments. They’re using their reserves to sup­port and speed up overseas expan­sion and acquisitions by Chinese companies.

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Manipulation Rumors Abound as Copper Price Rises

While the global recession has hit most commodities hard, the red metal has defied gravity and last week hit highs for 2009.  Copper contracts for delivery in three months’ time closed at $5,522 on Friday, 76pc ahead of the low on Christmas Eve last year.

One trader said: “It looks funny.  There are vast volumes being bought in the markets, it’s got all the hallmarks of someone trying to corner the market.”

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