The Commodity Super Cycle (by Mic Hayes)

No doubt you are feeling the effects. Oil prices keep rising, the price of bread is up and just about everything costs more than it did a year ago. Unlike previous periods in history the current trend to higher commodity prices is unlikely to slow anytime soon. What makes this cycle different from previous inflationary periods is the sheer number of people on planet earth. During my lifetime world population has more than doubled from just fewer than 3 billion in 1950, to nearly 7 billion in 2008. This growth rate is unprecedented in human history.

It took 130 years for world population to double from 1 billion to 2 billion. In this century it will only take fifty to sixty years to double world population. We are now in what is termed a logarithmic growth phase. The curve is steep and getting steeper. The planet has a finite amount of resources and space. We have more and more people demanding fewer and fewer resources resulting in higher prices. All of this translates into continued higher prices for commodities - in essence a super cycle of increasing prices.

Higher standards of living around the world add to the stress on world commodities. People earning more and living better demand increased quality and quantity of food, housing and transportation. Asia's rapidly growing economy is one of the key reasons for the higher prices in copper, zinc and aluminum to build infra structure and new housing for a growing middle class. Fortunately there are investment strategies available to profit from these unique economic circumstances.

The prudent investor should be positioned in the commodity markets to take advantage of rising prices. Commodity trading can be a very risky venture. It requires a good understanding of fast moving markets and time to keep a close eye on market activity. We strongly recommend seeking professional advice before making a financial commitment.

Michael Hayes is an active Futures/FOREX trader. He publishes a weekly trade plan for Futures and FOREX traders. His trading tools for TradeStation users and weekly Trade Plans are available CTGFutures