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Are commodities in a bubble? That's a question a lot of people have been asking and I'm sorry to disappoint but I don't know the answer. It would seem though that buying into the commodities boom right now depends a lot on whether you believe China will continue to grow rapidly for the immediate future. If China can maintain 10% growth or even slightly less, demand for commodities will continue to support prices. If it doesn't, well, then all bets are off.
If contemplating an investment dependent on Chinese demand it would probably be wise to remember the Chinese government is actively trying right now to cool speculation and lending through higher bank reserve requirements and interest rates. In other words, making a bet on Chinese commodity demand right now is a also a bet that the Chinese government will be able to reduce inflation and speculation but not growth. I think central bankers call that "sticking the soft landing".
After all these years of China's boom, anyone in Asia just now entering the mining industry could be called a little late to the party. Let's just say that person will probably never be known as the "smart money".
And so without further ado, I give you the latest sign that a top in commodities - and maybe Chinese growth - is near (Via a Bloomberg article):
This isn't the limo company's first attempt at diversification:
Wah Nam bought a copper mine in 2008 and continues to run the limo business, although they don't seem to be very successful at it:
And now they've made a bid for an iron ore company just as China goes about trying to quietly deflate a housing bubble. Is it a sign of a top? I don't know but it sure as hell isn't the bottom.
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