This is great quote for all of the commodity bulls to take to heart. We are not in a a Malthusian world of shortages and excess demand form growing population. There will be innovations to offset the shortages and the spike in prices. For example, rare earth which ave been restricted for export by China have seen huge price increases. The result is that there will be innovation to find substitutes. Buying commodity equities is based on the idea that they will be able to innovate and find a cheaper way to gain commodities. You are long innovation and economies of scale.
If you believe this story, you have to think of commodity investing as opportunistic. When there are supply shortages, be long. When the shortages are eliminated be short. Holding long-only commodities under the idea that there will be a long-term positive risk premium does not make sense.
If you believe this story, you have to think of commodity investing as opportunistic. When there are supply shortages, be long. When the shortages are eliminated be short. Holding long-only commodities under the idea that there will be a long-term positive risk premium does not make sense.
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