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STOP PRESS
8 Aug 08
What about the recent big falls in commodity prices? What about Deutsche Bank telling investors to get out of commodities because "the commodity boom is over"?
They may be right but we don't believe so.
This looks more like the normal type of correction to be seen in any area of rapid growth.
The up-trend in resource prices started around 2003 and it came at the end of amost two hundred years of commodity prices declining in real terms.
A two-hundred years down-trend then 5 years of price rises then a resumption of down-trend?
Doesn't seem to make a lot of sense.
The world's population has doubled since 1960, from three billion to well over six billion.
The world economy may be slowing but commodity prices, while retreating at the moment, are still up for the year. Copper is 14% ahead of last year. Gold is up 5%. Aluminum is 23% more expensive.
We may well see a period of several months with resource prices pretty well 'stuck'. But with the World Food Organisation forecasting that 30% more food will be required in 15 years time, it seems a very strong probability that agricultures will benefit greatly.
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CAN WE BE CERTAIN OF SIMILAR RESULTS OVER THE COMING YEARS?
Nothing about the future is certain (except, traditionally, death and taxes!).
However, the world is in the midst of a commodities 'boom' that started in the early 2000s. True commodities booms are quite rare - until this one, only 2 in the past 150 years -
- For 33 years between 1885 and 1918 the burgeoning demands to feed the industrial revolution drove prices higher and higher.
- During the 30 years from 1945 to 1975; the aftermath of a world war which almost demolished infrastucture and manufacturing in Europe and Japan brought a global commodity prices explosion.
So when such periods do occur they tend to be sustained for 20 to 30 years. History does not necessarily repeat itself but with the increasing world poulation, the enormous demand for commodities in developing markets - China standing out most of all - the likelhood seems very high.
We believe that the 'mixed bag' of commodities in this fund, the time-scale of 5 years, the apportionment of investments after the results are known, and the capital guarantee make this an attractive fund provided you accept the inevitable volatility.
DETAILS:
Minimum Investment: £3,600 (Maximum £2 million)
Open for Investment until: 1 September 2008
Maturity Date: 24 September 2013
Returns: 50% of the movement in the best performing commodity
plus 30% of the of the movement in the next best performer
plus 20% of the movement in the poorest performing commodity
plus full return of invested capital
Early Investment: If you invest before the launch date then interest at 4.00% p.a. will
be added to your initial sum up to the launch date.
Initial Charge: Zero
Ongoing Charges Zero
Early Encashment: A charge of £150 is levied if you cash in before maturity.
N.B. Should the commodities show no growth or negative growth at maturity you still get back all the money you invested.
