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An Argument for Betting Against Jim Rogers, Jeremy Grantham and Commodities

October 06, 2011 | About:
CanadianValue

CanadianValue

210 followers
I’ve bought into the bullish commodity argument put forth by gurus such as Jeremy Grantham and Jim Rogers. I came across an argument against betting on commodities from Dylan Grice of SocGen.

Basically Grice suggests that buying commodities is shorting human ingenuity. He uses the example of human ingenuity crashing the price of natural gas by unlocking unconventional shale gas.

Over time commodities prices have always decreased in real terms.

This is very different than Jeremy Grantham’s suggestion that we have entered into a new paradigm for commodity prices.

About the author:

CanadianValue
http://valueinvestorcanada.blogspot.com/

Rating: 3.4/5 (8 votes)

Comments

AlbertaSunwapta
AlbertaSunwapta - 2 years ago
Ingenuity and higher prices. The ingenuity though may not be new but instead rediscovered. Inventions that were deemed failures may only have been ahead of their respective commodity price curve. This speeds deployment since they are off the shelf. So what? Well, if so, the supply can ramp up much faster than anticipated because markets don't realize how much of the leg work has already been completed in years past. Forecasters utilize the old low, near fixed price discovery rates to forecast supplies, thus driving price speculation up higher and faster.

I imagine that higher gold prices have turned a lot of known but 'marginal' resource into economically viable resource. Now new mining and processing techniques will employed and techniques that were known from past experiments and 'failed' inventions plus practices from other mining sectors will be deployed now that the commodity price justifies it.

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