May 12, 2008

Silver... Invest for next 5 year

Silver's price history Silver remains historically undervalued. Despite the incredibly bullish fundamentals outlined silver has so far underperformed nearly all the other commodities. Silver has gone from below $5 to some $16 and is up some 190% in the last 7 years.
This seems like a lot but when compared to other commodities and metals it is very little:
Oil is up from $10 to $63 or 600% and more than 6 fold.
Zinc from $.35 to a high of $2.00,. now $1.50/lb or nearly 5 fold.
Copper, from $.75 to a high of $4.00, now $3.58/lb or nearly 5 fold.
Lead from $.20 to $.90/lb or nearly 5 fold.
Nickel from $3 to $22/lb or more than 7 fold.
Indium, Molybdenum, Selenium, Cobalt are all up 1000% or 10 fold and more.
Uranium is up a phenomenal 1300% or 13 fold.
Many commodities are up between 5 and 13 fold. Silver is not even up 3 fold. If silver were to catch up with these other less rare and less precious metals, it would have to increase in value by some 500%. From the bottom at some $5/oz in 2001, that would result in silver being valued $25.
Silver reached $50 briefly in 1980 when just one billionaire Bunker Hunt (one of a handful of billionaires in the 1970’s) attempted to corner the silver market causing the price to surge (in conjunction with many investors seeking to hedge themselves from the stagflationary 1970’s). A lot of technical orientated analysts, investors and hedge funds are looking at this figure and as nearly all the other asset classes and commodities are all at near all time records there is every reason that silver will do likewise in the coming years.
Silver is priced at some $16/oz today. The average price of silver in 1979 and 1980 was $21.80/oz and $16.39/oz respectively. In today’s dollars and adjusted for inflation that would equate to an inflation adjusted average price of some $60 and $44. It is for this reason that we believe silver will be valued at over $50 in the next 3 to 5 years.

May 11, 2008

Water... commodity of future

My personal belief that one day Water will be traded like the way Oil is traded today. Excerpts from article recently ported on web:
At first glance a map of the world doesn’t exactly scream “water shortage!” After all most of the world’s surface is covered in it. The problem is that only 2.5% of all the world’s water is fit for human consumption – and around two-thirds of that is locked away in icecaps and glaciers. This percentage has been fixed for as long as scientists have been researching the matter and is not about to change. Water is not like other commodities – there won’t be a ‘eureka’ moment where new reserves are suddenly discovered. And unlike other commodities, there is no substitute for water and just about everything and everyone relies on it. By the time you’ve got up, showered and had breakfast, for example, you will have consumed 40% of the 135 ltrs without giving it a second thought.
Investing in Water:
Although there is no known substitute for water, some of the wealthier Middle Eastern countries with the harshest desert climates have grappled with what seems an obvious solution – turn the sea into something that you can drink, or at the very least wash in. Desalination is expensive, but is popular in places such as Israel (15% of the country’s water is derived this way), Dubai, Malta and the Canaries. The filtration process is not without problems. There’s the huge amounts of power required to drive the pumps, not to mention the waste produced as a by-product; according to Heather Cooley from the Pacific Institute, typically it takes 100 million gallons of seawater to produce 50 million gallons of desalinated water. The other 50 million gallons of heavily salted brine is dumped back into the ocean. This, along with the high cost of establishing each plant, has been one of the main barriers to the process being adopted outside of the Middle East.