Commodities Watch for 2/18

From Prudent Bear. Part of a longer article--this is the relevant part.

Commodities and Food Watch:

February 17 – Bloomberg (Madelene Pearson): “Gold imports by India, the largest user, climbed to a record in 2010… according to the World Gold Council. Purchases totaled 918 metric tons… That exceeds the projection of about 800 tons made last month by Ajay Mitra, the group’s managing director for India and the Middle East… “Indications of the first month of the year has seen a very strong demand, so the momentum continues,” Mitra said… Fourth-quarter imports rose to 265 tons from 204 tons a year earlier…”

February 17 – Bloomberg: “Gold investment in China, the second-largest consumer after India, may gain 40% to 50% this year as investors increase purchases of the precious metal as a store of value, said the World Gold Council. ‘Chinese investors have shown great enthusiasm amid lack of other alternative investments,’ Wang Lixin, China representative for the council, said…”

February 16 – Reuters (Fayen Wong): “Demand in China for physical gold and gold-related investments is growing at an ‘explosive’ pace and its appetite for the yellow metal is poised to remain robust amid inflation concerns, said an Industrial and Commercial Bank of China (ICBC) executive. ICBC, the world's largest bank by market value, sold about 7 tonnes of physical gold in January… nearly half the 15 tonnes of bullion sold in the whole of 2010, said Zhou Ming, deputy head of the bank's precious metals department… ‘We are seeing explosive demand for gold. As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation…There is also frantic demand for non-physical gold investments. We issued 1 billion yuan worth of gold-price-linked term deposits in 2010, but we managed to sell the same amount over just a few days in January this year,’ Zhou said… The surge, which comes as Chinese investors look for insurance against rising inflation and currency appreciation… ‘Unlike the property market, investment in the gold sector is something the government is encouraging," he said.”

February 15 – Bloomberg (Luzi Ann Javier and Susan Li): “Global food supplies will face ‘massive disruptions’ from climate change, Olam International Ltd. predicted, as Agrocorp International Pte. said corn will gain to a record, stoking food inflation and increasing hunger. ‘The fact is that climate around the world is changing and that will cause massive disruptions,’ Sunny Verghese, chief executive officer at Olam, among the world’s three biggest suppliers of rice and cotton, said… ‘We’re friendly to wheat, corn and soybeans and bearish on rice.’ …As food becomes less available and more expensive, ‘hoarding becomes widespread,’ Abdolreza Abbassian, a senior economist at FAO, said…”

February 17 – Bloomberg (Tony C. Dreibus and Luzi Ann Javier): “Cotton topped $2 in New York for the first time ever and rose to a record in Zhengzhou on increasing demand from China and after Australia, the fourth-largest exporter, lowered its production estimate.”

In other words, the drought I told you about a month ago, plus population uprisings, and the demand for more and better food, is going to push this "food crisis" into high gear and leave it there for the foreseeable future...I'm guessing 2013 (how convenient!). I bet all this goes away (except for the weather) when Obama and/or Bernanke steps down.

Meanwhile, keep on whittling away at YOUR OWN demand for these goods--eventually, Wall St. will see that global demand is slumping and go elsewhere in search of the Almighty Profit.