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He basically says what I have been saying all along and what I believe is a high probability that is likely....We are in a long term bull market in commodities and are just seeing a correction.

Here is a snippet:

"The economies of the developed world are indeed slowing, and the high prices of commodities, especially of oil, have indeed reduced demand. But the reduction in demand isn't nearly as big as you'd believe if you read just the headlines. These days, you have to read not just the headline and the first paragraph but also the rest of the story, called "the jump," buried inside the newspaper. Take the case of oil demand and the headlines.

Here's the headline from the Oct. 11 Los Angeles Times: "Oil prices slip on market woes." Read just to the end of the columns printed on the front page of the business section and you'll come away with this: The International Energy Agency, or IEA, the paper reports, cut its demand forecast for 2008 to 86.5 million barrels a day, down 240,000 barrels.

What you won't discover unless you follow the story to the bottom of Page C3 is that the reduced projection is still 0.5% higher than oil demand in 2007. The world is near recession, and drivers are cutting back on gasoline use because of high prices, yet global oil demand is still going to increase in 2008, according to the agency's projections.

The stock market has had huge sell-offs and quick rallies in the past several weeks, but it's been stuck in a trading range the whole time. That's what happened in 1987, and it's the likely scenario for the rest of 2008, Jim Jubak says.

For 2009, the IEA also cut its demand projections -- to 87.2 million barrels a day. Unless my math has completely deserted me, that's more than the agency projects for 2008 demand. In other words, in the midst of what looks like a serious recession in the developed world, demand for oil is projected to keep growing.

Why? Because while demand may be falling in the world's developed economies, it is still soaring in the developing world. "We have yet to see unambiguous evidence of a sharp slowdown from China, while Middle Eastern demand remains robust," the IEA said.

Rolling back the barrels
So much for the demand side. If demand isn't falling as rapidly as investors might have expected, does the supply side have a surprise or two up its sleeve?

You bet. The global capital crisis has dried up capital for smaller oil companies and even for major oil producing countries such as Russia. Federal revenue from Russia's natural-resource-based economy is projected to grow by just 1.8% next year, the Russian government projects. That's down from projected 13.8% growth in 2008.

That's bad news for an oil industry that needs lots of investment capital -- $1 trillion by some industry estimates -- to stop the decline in Russia's oil production that began in the first quarter of 2008. Mexico, Iran, Nigeria, Venezuela and other oil producers are in much the same boat. Without increased investment, oil production will decline. But with prices way down from highs of about $147 a barrel, those governments have more-urgent places to spend the oil industry revenue."

It might be a rough 6 months to a year but I will be investing more in both AG (Cresud, CGAG and maybe a few others) and investing in things like steel, Nat Gas, oil, base metal infrastructure companies over the next year.

I think the next movement up will be more shocking than the last movement up....most especially if oil stays for any long lenght of time in the $50 to $80 range.....that is far too low for people to want to make substantial investments in things like oil sands or drilling in that deep cold water off of Brazil.

Rob S
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