I do not know if any of you know the old blues song from the 1930's "If I lived the life of a millionaire, spending my money ... I did not care .... Among my friends got into a mighty good time ... buying bootleg liquor, champagne and wine. ooh ... But then I fell so deep ... had no friends and had no place to go ... "
Today it is as if the same song is sung by the U.S. Dollar. The dollar is abandoned one friend after another. One would expect the dollar to rallyits big decline, but it does not work. WHY?
More and more countries have their currencies to the dollar have targeted are re-examining the so-called the dollar peg.
China is being forced to do so by European and American pressure. Hong Kong speculators attack the Hong Kong dollar peg to the dollar and forced the Hong Kong government to defend it with great effort.
The six countries of the Middle East linked to the U.S. dollar (Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, Oman andQatar), a quantity of oil exported in the past and tied their currencies to the dollar. This group has decided to launch a single currency by 2010.
Many other oil-exporting countries are interested in paying euros for their energy.
The new rich nations of the world that sell raw materials or manufactured goods are all wondering about the big build in U.S. dollars in their portfolios and what they are doing to diversify their risk. In addition, causes a declinein the value of their holdings too many U.S. dollars to other problems.
Unless dollar countries collect large amounts of dollars, they must be sterilized to prevent inflation (this is often through the purchase of dollar-denominated debt securities of the case). If the dollar used to buy goods are, it can at the end of imported inflation (especially when they purchase goods from non-dollar area, the) rise in prices.
Although the dollar can rally at any time until the U.S. began to faceits fiscal and trade deficit problems, and the U.S. economy comes to an end the credit crisis ... the currency remains "Under Pressure'...( a popular 80's pop song for those readers who may not be familiar with 1930's blues tunes).
China and some other sovereign wealth funds are equipping their strategic INVESTMENT IN METALS, ENERGY AND COMPANY
Its focus is on the acquisition of mineral resources, energy sources and investing in private equity houses, where they can getstakes in companies big and cheap.
Today it was announced that China is trying to make significant investments in a variety of private equity firms. This is logical, and it follows the pattern that they have set in recent years. They were collecting mineral and energy assets in Africa and Latin America.
They do not mind going investment in countries with corrupt governments or wars. You are more than happy to invest in robust African and Latin AmericanBack to countries such as Tanzania, Kenya, Uganda, Brazil, Peru and other raw materials. They are for nickel, coal, zinc, copper, iron ore, petroleum and precious metals.
Political risk is not their major concern. My major concern is to make the raw materials so that 300 million more Chinese people (in the case of China), and countless more in other countries making the transition from subsistence farming rural to urban dwelling, and his blue and white collar jobs.
No wonderPrecious metals, base metals and energy continue to rise ... Demand continues to grow. We estimate that it will continue the demand for the coming years.
Better Late Than Never
The IEA (International Energy Agency) evidence that its new forecast for crude oil (to be announced soon) will be much higher than the previous price lists have been forecast.
The failure to do was win the Peak Oil theory has for a long time, the IEA Low-ball estimates of global energy prices for the whole fiveYears ago we were screaming about higher oil prices. That was because they believed that the oil producing countries told them. Of course, the oil producing countries had a strong interest in trying to sell the world, they could increase production and to reduce oil prices down, the consumption would remain high.
Now even the IEA has seen through this paper thin argument, and is well known that oil prices can go much higher because the quantity of oil that can be produced in the world,Reached its peak.
Our Topics
We are pleased that our subjects have worked so well, and we will continue for most of them work in the coming months to see.
Energy, we are confident that the energy that we could predict years to go to $ 100 by the year 2008 it will be received shortly. What then? At this point, we believe that alternative energy and foreign energy companies may be more attractive than U.S. energy companies. We have investments in energy companies in Australia, Canada, India,Africa, the North Sea, Norway, Austria, South America and the Mid East. We will continue to own oil, natural gas, uranium and renewable energy investments in the energy sector.
Base Metals: Although we remain bullish on base metals, long-term and for which we are concerned that a weak U.S. economy leads base metal stocks move sideways. We will not emphasize base metals stocks for the coming months for this reason.
Precious metals and foreign exchange, the weakness of U.S. dollarmentioned above is very good for gold and currencies not in the U.S., and we remain very positive on them for the coming months. We have both gold royalty company and the metal itself. We have several non-US currencies, including the Canadian dollar, British pound, among others.
India-India has recently changed the investment regime for foreign investors. This can cause a short-term decline in Indian stocks, which we would be happy to see. We believe that India holds hugePromises about the long term and we would be a lower price at which the extension of the Indian positions such.
China-China is best played by Hong Kong, and this has been a very successful area for us. We will use any market corrections (usually at least once per year) to add to our Hong Kong based positions in Chinese companies.
Singapore and other rapidly growing countries, where we want to wait, and add to the market corrections.
We look forward to your comments and weThank you for your attention.
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