The commodity market, which was in bear grip for the last 20 years has reversed its course and is booming now. Factors like global economic recovery and increasing demand for commodities from China are adding to the recovery and it has emerged as an alternative investment avenue.
Over the last 20 years, the prices of commodities have generally been in a very long-term bearish market. Even as recently as 2002-03, the outlook on recovery in the global economic activity and world trade was generally subdued due to depressed equity markets, weakening US dollar and serious geo-political concerns. Commodity markets across the world were impacted by these developments. However, of late, as the global economy recovers and demand from China increases, the scenario will completely change. Commodity markets are booming. In the global investment market, the newly hailed, attractive, asset class is commodities. So, investors are attracted to this new booming market for investment.
Business cycle analyst and investment expert, Marc Faber predicts that the next big boom will be in hard assets i.e., commodity, not financial assets. According to him, global economic recovery and the depreciation of financial assets, due to excessive printing of money, will make commodities appreciate in relative terms. Investors now have an opportunity to find out which commodities will boom and which will not. However, it's a different kind of research, which the investors have to do, if they want to invest in commodities. There are no balance sheets to read, no quarterly results to wait for, no dividend announcements to factor into prices. |
