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Current trends and investing in commodities for the future

Elizabeth Walters Elizabeth Walters, Stockhouse
0 Comments| July 1, 2013

Investors may have grown tired of risky resource stocks.
But one geopolitical researcher believes the future looks bright for two key commodities that will continue to play a crucial role in the life of global economies.
The first is copper, says Chris Berry, President of commodities research firm House Mountain Partners LLP, in an interviews with Stockhouse.
“This is the one metal that’s truly ubiquitous in the global economy, regardless of where we are in the economic cycle; boom or bust, copper’s always, always going to be needed.”
“I think it’s of particular importance these days because grades for existing mines are falling while urbanization trends that we are seeing coming out of the emerging world are continuing, albeit at a slower pace than in recent years.”
In Berry’s opinion water is the second resource investors looking for an opportunity should focus on.
He said water is a limited resource and as the population expands it will become increasingly scarce.
“That’s going to put the spotlight on various water purification or desalinization technologies.”
Berry also believes the future is bright for “metals and minerals that are involved in the generation or the storage of energy.”
As the world’s population grows, now approximately seven billion and forecast to grow between nine and 10 billion by 2050, so too will demand for energy.
“No middle class throughout history has either grown or sustained itself without access to reliable and affordable energy or electricity,” said Berry.
In the near term, the spotlight is on uranium, cobalt and scandium.
“The investment case for uranium really revolves around the need for, let’s just call it ‘green’ or ‘clean’ electricity, and uranium for all of its challenges, with respect to nuclear waste, storage and potential for accidents, is the one form of energy that offers the highest energy density at the lowest cost.”
Cobalt has potential in the battery and technology industry, but the majority is mined in politically unstable zones and Scandium could be boosted by the solid oxide fuel cell business and “…has the potential to really take off…” but in Berry’s opinion hasn’t because “…there is no primary source of scandium out there.”
“I am very interested in companies that have scandium deposits and have plans to take them to the next level because I see the solid oxide fuel cell business as a real and ready market.”
As the U.S. and the Eurozone continue to stager, Berry believes countries that will show promise in the next decade include Turkey, Indonesia, Mexico and Colombia.
These four countries have strong demographic profiles, a growing middle class and well-diversified economies.
Berry believes Australia and Canada will benefit in the decade as well, as they are both commodity-focused countries.
“I think that we’re starting to see a number of very significant long term trends converge, despite the doom and gloom in the commodities stage right now,” said Berry. “It’s something that really cannot be stopped, so I would encourage your readers to think about where they want to be in the commodities cycle and where they want to be with respect to investing in commodities because I think it’s going to be a very interesting place to be, going forward.”


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