EDITOR'S LETTERMerryn Somerset Webb
Come back to commodities
We were once very intense commodity bulls at MoneyWeek. Back in 2001 or so, around when we started trying to persuade you all to buy gold, we also got into the idea of the commodity supercycle. Then prices of almost all commodities – from sugar to silver – were languishing at ludicrously low levels. Yet exploration had collapsed. There was very little new supply coming online, despite huge (and obvious) demand down the road from fast-developing emerging countries. Prices had to go up. And so they did.
We got nervous on all this a few years ago, and have been avoiding the industrial miners in particular for a while. This week, however, our cover story suggests you might like to buy back in. We still think China will see a hard landing, and we still think the global economy is in a bit of a pickle growth-wise. No change there. But it is worth remembering a few things.
First, even a slowing or rebalancing China will still need a good supply of commodities to keep going. Second, commodities aren’t all about China – even as recently as 2004, Japan was the world’s biggest importer of iron ore. And third, investing isn’t about growth, it is about price.
• Read the full editor’s letter here: Come back to commodities