Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

Be Careful with Commodities (Other than Precious Metals, Such as Gold)

Investing profitably in commodities, such as copper and oil, will require a good macro awareness of changing trends in supply and demand, and these trends will be changing rather dramatically over the next few years, as we have described. So, for now, with the world economy rebounding somewhat due to massive government stimulus both here and in China, which is one the largest buyers of commodities in the world, commodities have been rising. However, if China’s economy should happen to crash before ours (due to their real estate bubble popping, massive money printing of their own, and other issues), we will certainly see demand for commodities begin to fall, and therefore commodity prices. And as the dollar falls deeply, collapsing economies around the globe will put heavy downward pressure on the demand for all industrial commodities, which will further depress prices.

Interestingly, when the dollar bubble begins to fall significantly, commodity prices will increase dramatically in dollar terms. And the demand for U.S. commodities will rise because in nondollar terms, our commodities will look like bargains. For example, the price of non-U.S. oil will eventually fall as low as $10 to $20 per barrel, as worldwide demand declines with the overall world economy. But in the United States oil will eventually cost $100 to $150 per barrel due to the drastic decline in the value of the dollar. Meanwhile, demand for ...