China is snapping up commodities while price remain low, a role U.S. investors would normally play but so far have not, according to one of the world's leading commodity analysts.
Now may be the time for American investors to follow the trend — if they have any money left.
American funds were used to finance China during what some economists are now deriding as the "fake boom" from 2006 through 2007, caused by overly-accommodating Federal Reserve interest rate policies. The Chinese are now using that money to buy up the raw materials of their next boom at rock-bottom rates.
"Right now, the 'blue light special' light is on in the commodities aisle and the only country doing any shopping seems to be China," Kevin Kerr, editor of Global Commodities Alert, told Marketwatch.
"With prices extraordinarily low in almost every commodities sector, dependent countries like the U.S. and others should be snatching up supplies of key commodities hand over fist," he said.
Metals, energy and other commodities remain inexpensive. According to Marketwatch, the price of copper is up about 65 percent from its low in December. That's still 46 percent lower than its peak in July 2008 of $4 per pound.
Crude oil is up 59 percent from its low in February, though that's still down 63 percent from its record level near $150 per barrel seen in July. Cotton has climbed 58 percent from a low in November , down 25 percent from a high of 76 cents per pound in June of last year.
"The time of low prices will almost certainly be short-lived for energy, agriculture and soft commodities and in the blink of an eye, as demand returns, we will see that many supply lines have been reduced due to the economic meltdown," said Kerr.
He forecasts that prices soon will see a "dramatic" increase instead of a gradual one.
Mark T. Williams, a risk management expert and finance professor at Boston University, reckons that Asia is recovering a bit ahead of the U.S.
"If Asia truly is in the early stages of an economic recovery, base metals such as copper, aluminum and zinc should see sustained upward price movements," Williams said.
"Agricultural commodities such as rice, wheat and corn should also see price increases as the economy strengthens," and oil prices will "track with the rebound in the Asian economy."
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