Rick Rule on the long bull market in commodities

If you look around a range of commodities over the last two decades; pick one: oil, coal, copper, nickel, even the ones that are down substantially in the last 18 months like lithium.  We are clearly in a bull cycle.  And the reasons for that are really simple: There are eight billion of us on the planet; every day there's more.  For 40 years we've done a great job lifting the poorest of the poor worldwide - 1.5 billion people - out of dire poverty, making them merely poor, as opposed to extremely poor.  Is there a lot more to be done?  Absolutely!  But we've done a great job.  The consequence of that, Lucijan, is that when poor people get more money, which has happened on a wonderful scale for 40 years - the stuff they want to buy is made of stuff.  When you and I get more money we buy some little gadget from Apple or we buy a service.  But when poor people get more money they replace a thatched roof with a metal roof, they replace mud waddle with concrete, they go from barefoot to shoes to bicycles to 55cc motorcycles to a Toyota Hylux.  And this is going on around the world.

Is the bull market going to continue?  Of course!  There's a billion people with no access to primary electricity... a billion!  There's another 2 billion people on earth with access to either intermittent or unaffordable power.  And the same can be said for calorie counts.  The same can be said for the whole range of the material standards of living.  Meanwhile, you want to live better, too.  You want your children to live better than you do.  All of this requires stuff.

~ Rick Rule, interview with Lucijan Valkovic, 5:10 mark, March 28, 2024

Rick Rule on natural resource investing

In terms of natural resource investing, you're either going to be a contrarian or you are going to be a victim.  There isn't much by way of middle ground.  Everybody wants to invest in commodities where the price action has already justified the narrative, but the price action takes the value-added out of the narrative.  You have to look for commodities that are in liquidation, where the price is so low that the industry is liquidating and where if the price of the commodity doesn't increase, the commodity will become unavailable to humankind.  And finally, humankind needs to need that commodity.

Another way to put that phrase, in terms of the time value of money, is that you need to invest in things that are inevitable, even if they aren't eminent.  And you have to need to know the difference between those two words.

~ Rick Rule, interview with Dan Ferris and McLaughlin, Stansberry Investor Hour, 60:30 mark, March 4, 2024

WSJ: earnings are inflated by energy and commodities

Soaring profits at oil companies and miners are making earnings look better than the reality of the rest of the stock market, and distorting Wall Street’s favorite valuation tool, the ratio of price to forecast earnings. 

Strip out the energy sector and the expected rise in earnings for the S&P 500 this year drops from 8% to just over 1%, according to data from Refinitiv’s IBES. Strip out miners and other commodity players, too, and earnings for the rest of the market are now expected to fall this year.

~ James Mackintosh, "Energy and Mining Are Making the Stock Market Look Too Good," The Wall Street Journal, September 18, 2022

Hugh Hendry on the "glaringly obviously attractive" returns from the mining sector

The education - or miseducation - of the mining sector actually turns the odds in your favor as an external minority investor.  And because taking away the reflexive behavior to expand supply with higher prices simply means that higher prices are going to be with us longer, and so they're going to keep rewarding you as an investor.  So part of society is going to be on your ass saying you're morally corrupt.  It's them who are morally corrupt, but you've got to be able to take that on...  The returns from the extractive industry are just glaringly obviously attractive.

~ Hugh Hendry, Stansberry Investor Hour interview with Dan Ferris, 38:30 mark, May 2, 2022

Marko Papic is bullish on commodities and emerging markets

Commodity producers are cheap, their currencies are cheap, their balance of payments are in surplus...  Last year, do you know what they were doing?  They were jacking up rates!  (other than Turkey)  They were jacking up rates, doing exactly what we taught them to do through IMF and World Bank programs while America was basically printing like the most populist regimes in the world.  So emerging markets took the pain last year, they took the hit of tight monetary policy, they're cheap, their current accounts are in surplus and commodities have risen massively.  Karl Marx could rise from the grave and run Brazil and I'd still buy it!

~ Marko Papic, "Geopolitical Expert Marko Papic on Ukraine, Commodities, and Ignoring the Media Noise," Stansberry Investor Hour, 28:00 mark, January 27, 2022

Tony Deden on investing in resource companies

I believe we are witnessing the beginning of the end of the age of financialization and, if I’m right, then owning commodities is going to be essential.  But how do we do that in the best way possible? 

It is not so easy as you might think.

Finding exceptional companies with first-class management and exposure to the right commodities is difficult.  But if you are prepared to look in places where others are either discouraged from investing or which are simply overlooked, you can find exceptional things.  Valuable things.

~ Tony Deden, "Two Men in a Boat," Things That Make You Go Hmm..., September 27, 2020, p. 11

Pimco fund manager on the commodity boom

Dramatic gains that we’ve seen, primarily liquidity driven, are unlikely to be repeated [in the next three to six months].

Large parts of the global population, particularly in China and India, are going through a particularly commodity-intense growth phase, [which bodes well for commodities’s longer-term prospects]. We see significant supply-and-demand mismatch.

~ Mihir Worah, portfolio manager with Pimco who leads several of the firm’s top performing commodity-based funds, "Why commodities still belong in your portfolio," MarketWatch.com, June 10, 2011

Jack Bogle on commodity investing as speculation

The problem with commodities, gold included, is they’re completely ranked speculation while the ways of delivering stock and bond return are easy. Stocks are riskier but they grow at the rate of our GDP. I think this is gonna be a good decade for that, but I’m worried about the obvious aberrations we’re facing in a political system that doesn’t’ want to respond to current events that gravely affect our nation.

~Jack Bogle, founder, Vanguard, FOX Business interview, March 30, 2011

Ron Insana calls for market correction, bearish on 'commodity complex'

I suspect this market is susceptible to a, we're now down 3%, 3-10% off the highs. I am bearish on gold, I own puts on gold just to put that out there, and I am bearish on the commodity complex generally. But I think the risk-reward still favors stocks over the asset classes people have been dabbling in, or, in the case of Treasury bonds, far too deep in for the last several months.


~Ron Insana, CNBC interview, March 10, 2011

The Economist magazine calls the end of the cheap food era (2011)

An era of cheap food has come to an end. A combination of factors—rising demand in India and China, a dietary shift away from cereals towards meat and vegetables, the increasing use of maize as a fuel, and developments outside agriculture, such as the fall in the dollar—have brought to a close a period starting in the early 1970s in which the real price of staple crops (rice, wheat and maize) fell year after year.

~The Economist magazine, "A special report on feeding the world: The 9-billion people question", February 24, 2011

Ben Bernanke on the realities of monetary policy

Monetary policy can't add one bushel of corn to the world.

~Ben Bernanke, chairman, Federal Reserve, testimony in House Budget Committee hearings discussing the effect of Federal Reserve policies on world food prices, February 9, 2011

Kevin Duffy on lingering optimism over commodities (2008)

Such optimism indicates the bear market in commodities is likely still in the early innings. We find the arguments of the minority skeptics much more convincing, particularly a) real commodity prices decline over time due to human ingenuity and b) a global recession will sap demand already weakened by high prices.

~ Kevin Duffy, Bearing Asset Management, Azimuth blog, August 28, 2008

Julian Simon: Are natural resources finite?

Our supplies of natural resources are not finite in any economic sense. Nor does past experience give reason to expect natural resources to become more scarce. Rather, if history is any guide, natural resources will progressively become less costly, hence less scarce, and will constitute a smaller proportion of our expenses in future years.

~ Julian Simon, The Ultimate Resource (1996)

Al Goldman on commodities

Nothing goes up forever. I think commodities have hit an intermediate top, but they haven't for the long term.

~ Al Goldman, strategist, Wachovia Securities, "Dow Industrials Move Close To Wiping Out Year's Losses," WSJ, May 1, 2008

Gary Shilling on biofuel schemes

With global recession, demand for industrial commodities and oil will fade. It will become clear that much of China's demand for commodities was not primarily to supply its citizens but to supply its export market.

No one will be talking anymore about how oil production is peaking. Look at Petrobras' huge oilfield discovery off Brazil and consider the gigantic energy supplies that will come from tar sands, nuclear, coal liquefaction and maybe shale. More supply equals lower prices.

Good weather and weak ethanol prices may knock down ag prices. A recent report in Science magazine has discredited many biofuel schemes as environmental salvations. We're going to stop fueling our cars with taco ingredients.

~ A. Gary Shilling, "Sell Commodities," Forbes, March 10, 2008

Jim Rogers on the credit crisis and commodities

There are always corrections in every bull and bear market. If you think this will change the secular bull market, you have no clue what is going on.

~ Jim Rogers, "Is Jim Rogers Crazy?," HardAssetsInvestor.com, September 06, 2007, by Matt Hougan