A few years after the global economy emerged from the economic crisis of 2008, commodity prices began to surge, thanks to ongoing robust demand from China. Chief financial officers at mining firms quickly realized that firm commodity prices implied robust future profit streams, and a broad range of new mining projects were put into motion.
To paraphrase the 17th-century philosopher Thomas Hobbes, the tenure of a corporate executive can be "nasty, brutish and short." Indeed, many CEOs and chief financial officers last just a few years on the job before the board decides that fresh blood is needed.
To understand the sheer magnitude of this opportunity, let's put that figure in context. The U.S. Dept. of Energy estimates that there are 23.9 billion barrels of recoverable shale oil in the lower-48 states. That means the Monterey Shale by itself holds nearly two-thirds of the total.
Analysts have reset their expectations for a basket of commodities. Here's how investors can turn the bear market to their advantage.
Buffett thinks the value of all stocks in the Wilshire 5000 Total Market Index should be worth less than the U.S. gross national product (GNP).
Slowing economic activity in these regions won't likely drag the U.S. economy into recession. But it could lead to slower-than-expected growth, creating a vast disconnect between stock valuations and corporate profit growth.
The only people that make serious money in commodities trading are the brokers. They pocket hefty commissions from clients that speculate on gold, wheat, oil, cattle, lumber and even coffee. But that gravy train is ending.
Silver may be trading well off its highs above $40 per ounce, but investment demand has never been stronger. That opening day marks the highest one-day tally in the history of the Silver Eagle program dating back to 1986.