In 1983, two great commodity traders and friends were having an argument. One was of the opinion that great traders are made. The other said,” No, they are made.” Both had a bet. They placed an ad in the famous Wall Street Journal, The New York Times and the Barrons for novices to apply for apprenticeship as commodity futures traders. Lo ahd behold many hundreds applied. Only 13 novices who had never traded anything before were selected and taught by these two great men how to trade commodities. Thus the great Turtle Trading Experiment in the history of trading was born. These novices were called as Turtle Traders by the two great traders. Ultimately almost all succeeded and became millionaires themselves. Learning commodity trading is not difficulty. This is the best time to do it. Commodity markets have entered a historical bull market that will continue for many decades in first half of the 21st century.
Commodities like gold, silver,oil, copper,uranium, wheat, cotton and other are experiencing an all time high historical prices. Gold prices recently breached the unheard of historical barrier of $1200 per troy ounce. Gold prices have retraced somewhat, but the market is poised for another rally in gold prices in the next few months. Other commodities are also experiencing a all time high demand. Crude oil is expected to reach close to $200 per barrel in the next few years with the global economy finally out of recession. What we are watching is a secular bull market in the commodities. This secular bull market may continue for many decades in 21st century. That is why it is being said that 21st century belongs to commodity trading. The fundamentals behind this secular bull market are strong.
But this does not mean that the commodity bull market will go up in a straight line. There will be times when the commodities market will no perform very well. This is simply the nature of the commodity cycle. No market ever goes up in a straight line.
What are the fundamentals that are driving the bull market in commodities? These are the factors like the rapid global population growth that started in the last half of 20th century and is expected to continue in 21st century. This rapid population growth is taking place mostly in the developing continents like Asia and Africa. Recent studies done by UNDP, an agency of United Nations indicate that the time for the global population to increase by 1 billion people has decreased from 50 years in the early 20th century to something like 13 years in 21st century.
Now this rapid increase in the global population is going to put a lot of pressure on natural resources. It is natural for people to eat and built homes where they can live and sleep. These homes need heating in winters.All these things need natural resources.
Couple this population growth factor with the largest urbanization movement that the world is experiencing. In early part of 20th century only 15 of the world population lived in cities. Now this figure has jumped to more than 50%. More and more people are moving to cities around the world in search of jobs and better living conditions. Urbanization means a high demand for natural resources as city dwellers consume a lot more natural resources as compared to village dwellers. This phenomenon is more pronounced in Asian countries.
Then there is rapid industrialization that is taking place in countries like Brazil, Russia, China and India which is putting a lot of pressure on the global supply of natural resources. As energy resources get depleted, more and more competition will develop between these countries to develop direct access to global energy markets.
Mr. Ahmad Hassam is a Harvard graduate. Learn Commodity Trading! Get the ULTIMATE SWING TRADING SOFTWARE FREE.
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