The IMF recently calculated that the cost of rescuing the financial system has come to approximately $12-trillion which is equivalent to about 20% of the of the world’s economic output or from a slightly different perspective equivalent to a USD3,300 payout for every man woman and child on the planet! Of course as with physics this action will ultimately lead to an equal and opposite reaction and that is a sustained depreciation of the value of paper currencies particularly “developed” currencies which have been the subject of significant increases in the money supply. Already commodities (hard currencies) are moving higher in both USD and non USD terms. We believe that the upside in commodities is only just getting into gear and the cost of the world financial bailout will lead to a sustained rise in the “price” of hard commodities creating a bubble which may well make the “TMT” bubble of 2000 look like child’s play.
One could do a lot worse than to buy commodities on dips.
Our wealth creation portfolio in which we manage our retirement funds is up 32% this year with approximately half the volatility of S&P 500.
