The only fundamentals improving are commodities

Jim Rogers makes an real life appearance on CNBC and talks to the masses of finance news junkies in the United States.

CNBC's website is bombarding readers with articles about this Jimmy Rogers interview. If you follow this site, or if you happen to keep your eyes and ears open for Jimmy Rogers in your daily information news sessions, you know he really is not saying anything he hasn't said before.

Basic conclusion – when the reality of printing so much cash catches up with the major economies of the world, people are going to realize their stock gains are in worthless, debased currencies. When this happens, hard assets and the companies producing them will flourish. Demand for copper and steel are not going to disappear, but is just may greatly diminish for U.S. Bonds and Dollar assets if hyper inflation hits.

Get the picture?

Jim Rogers: Profit from commodities, currencies and bonds in times of crisis

Can't seem to find part 2. Rogers covers his general view of where markets currently are and where he's putting his money right now.

Investors hopeful for a recovery in Natural Gas

A year ago people there was hysteria because of sky rocketing energy and commodity prices. In this analysis I focus on Natural Gas, which last summer reached a record setting high of $13.69 a million British Thermal units.

Things have changed (as you can see in the graphs below. The global economy now finds it self in the middle of a world wide economic crisis. Expensive commodities are the least of the world's problems right now.

Natural Gas Prices - 3 months


Natural Gas Prices - 12 months

So does this present a investment opportunity?

It definitely does, albeit one with a fair amount of risk... Commodity prices not withstanding, the fact remains that without commodities there would be nothing to fuel the global economy. Eventually when macroeconomic demand for goods and services pick up around the world so too will demand for energy.

However, how do you go about picking the companies that stand to benefit from a potential rebound?

Choose:

1. Companies with low debt and viable growth plans. Try do your homework so that the companies you choose fit your time line and expectations on when natural gas prices will recover. You don't want to choose a company exploring for the largest deposit of natural gas in Brazil only to find out it won't be extracting and selling the gas until 2015.

2. Look for natural gas producers with operations in NORTH America. As this Dow Jones Newswire article articulates, "Domestic gas producers that learned how to tap natural gas trapped in rock formations known as shales and that have enough credit or cash to survive the current lower price environment are expected to benefit the most from the possible in surge prices."

Marc Faber - Author of Gloom, Boom and Doom speaks with Bloomberg

Marc Faber, investment guru and the author of the Gloom_Boom_Doom report speaks with Bloomberg about the recent bear market rally.

Major points from the video

- Many stocks hit their lows back in October
- We're set for a 5-10% correction
- We rallied on the S&P from 660 to above 840. Faber thinks we'll head south, but not to the October/November lows
- As an investor, Faber has done well investing in resource stocks. Newmont Mining Corp., and some speculative exploration companies. However he feels you should not avoid these plays until after the correction and improved economic fundamentals.
- Right now he's venturing into banking stocks, carefully...

Jim Rogers comments on China - Tuesday, March 24

Marc Faber Says U.S. Stock Rally May Have 'More Legs' - Bloomberg Interview March 24, 2009

Marc Faber says he grows "good stuff," which makes you very happy ... HAHA

One of my favorite investment guru's, made a appearance on Asia Confidential, hosted by one of my favorite live commentator's from Bloomberg's Asia Crew, Bernie Lo.

Basically echoing a long term trend, described by other investors around the world. Faber explains in a casual manner how power is slowly shifts towards those who produce actual consumables like food, versus derivatives traders.

Marc Faber asked about investing in farmland said that they have a farmland in New Zealand and there they don't grow hashish but in northern Thailand "they" (people?) grow good stuff.

Marc Faber on Gold Explorers

Marc Faber on Gold Futures and a possible Bear Market Rally

Analysis and discussion with Marc Faber Editor and Publisher of the Gloom, Boom, and Doom Report. He is advising investors to buy gold in 2001 before it tripled, he is now advising investors to buy gold explorers. He also says that he expects a rally in stocks to start some time in the near future, and that a weakening dollar will be a good sign to look out for.

Video perspective -- Marc Faber "get rid of your cash buy commodities while they are still cheap"

Not sure exactly where Mr. Faber gave these comments, or to whom he was giving them to but this no less seemed like a interesting video to post. I don't love the way Marc Faber chooses to express himself in some situations, and I definitely do not agree with a lot of what he says.

None the less, he is a guru or sorts in the commodity world and when his comments to some random Belgian reporter (I think at least) get posted on YouTube I think it falls to news blog sites like this one to share.

Gloomy day in the news -- 3 part update

When I woke up this morning and did my morning news reading there weren't too many stories that particularly stood out... If you wanted to describe the news this morning in one word, it would have to be gloomy.

I've assembled separate posts according to region and subject of the the “Gloom and Doom,” as Marc Faber says.

Commodities in focus – mixed messages from China

Until this past October / November when markets came crashing down all over the world as the US credit crisis exploded into a full blown global economic crisis it seemed as if nothing could stem China's insatiable demand for commodities.

However, once economic crisis spread to wealthy nations a chain reaction started.

First, consumers who had been eating up cheap Chinese exports for years decreased their spending as credit dried up. Less demand for goods produced by China's manufacturing sector would mean less Chinese demand for commodities.

Second, a slowing global economy produced a situation where aggregate commodity demand shrank around the world. It mattered little if a country is rich or poor, a slowing global economy would mean less demand for energy and metals.

Third, as economic problems continued to spread it became less and less likely the economic dragon of China would be able to ride the storm out. If a global recession occurred, China would find it very difficult to rely solely on their domestic economy and international currency reserves to keep things growing as fast as they had been from 2001-2008.

Finally (and this is a over-simplification), combine all facts and you get a situation where the future of the global economy is unpredictable. Meaning, no one really knows when Chinese demand will pick up again, no one really knows when the global economy will recover and therefore investing in metals and energy seemed foolish if recession would hamper demand in the near future.

That being said, a few interesting stories passed through the presses this weekend. The first two indicate demand is returning to the commodity markets in China, the second two tell a different story.

Baoshan Steel, Angang Steel, Wuhan Iron & Steel and Maanshan Iron & Steel. Four major Chinese steelmaker stock ratings where raised by Credit Suisse, which said improving demand will help raise steel prices (click here for Bloomberg LP article).

China National Petroleum Corp., the country's biggest oil and gas producer, said it plans to increase oil and gas production by 5% annually to meet domestic demand (click here for Bloomberg LP article).

China's State Electricity Regulatory Commission said demand and output in China will continue to shrink this year because of slower economic growth. China is the world's second largest consumer of energy.

If people are using less electricity it means one of three things. First, it could be a bad sign for the economy. It could indicate the Chinese are becoming more efficient / environmentally friendly. Or third, it may mean the Chinese are trying to save a few Yuan from the higher price they have to pay for the energy.

The correct answer in this situation I feel is the first. A slowing economy simply means less demand for energy. I don't doubt the Chinese are indeed adapting their growth strategies to be more environmentally friendly, but I don't think it is the reason their demand for energy is shrinking (80% of China's energy comes from coal). Last, I don't think it's because of higher prices, commodities after all have once again become very cheap (click here for the Bloomberg LP article).

Moving onto aluminum. China's Shanxi Guanlu said on Friday it was shutting 40,000t of aluminum capacity owing to low prices and weak demand (click here for the full article from the Mining Journal).

I think the main idea to take away with you from all of this is that the market has no idea how to make up its mind and neither do the participants in the market. If and when the global economy does see a recovery, be sure you have some of your money invested in energy and metals, because demand will return and with a vengeance.

For a bit of perspective check out what Jimmy Rogers and Marc Faber, the guru's of commodity investing have to say.



Jim Rogers - Recession and Commodities in 2008




Marc Faber - Says He'd Favor Industrial Commodities Over Gold 2009 - P1




Marc Faber - Says He'd Favor Industrial Commodities Over Gold 2009 - P2

Jim Rogers says commodities will rebound after drop (update 1 from Bloomberg)

Bloomberg's journalists have been speaking with good old commodity guru's Jimmy Rogers and Marc Faber about commodities.

``I don't see that it's the end of the bull market,'' the chairman of Rogers Holdings, said in an interview in Bangkok before speaking at an investor conference later today. ``Until either a lot of supply comes on stream or the economy collapses, the bull market will continue,'' he said.

Soybeans, copper, platinum and crude oil have dropped from all-time highs after a rally in the dollar curbed demand for raw materials as a hedge against inflation and concerns increased that economic growth will slow. Sixteen of the 19 commodities in the Reuters/Jefferies CRB Index fell this month, after the index plunged 10 percent in July, the biggest such drop in 28 years.

``I am contemplating whether it's time to get involved in base metals again,'' Rogers, 65, said today. ``I haven't bought any for awhile.''

Gold fell to the lowest since October on Aug. 15, while platinum had the biggest intraday loss since 2001. Aluminum has dropped 18 percent from a record on July 11 and Nickel is down 26 percent in the past year.

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Click here to access the full article from Bloomberg