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Excerpts from a story today regarding commodities. If you don't
think we still have room to boom in that sector, think again.
Dan
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By Barbara Lewis and Clare Black
LONDON, March 10 (Reuters) - Big-money investment funds are
deepening their thrust into booming commodities markets by buying up
physical assets and taking a nimbler trading approach.
An early influx of speculative hedge funds into commodities
markets has been joined by growing investment from more cautious
pension, insurance and endowment funds as evidence grows that the
commodities boom is no passing fad.
INDEXES STILL RULE
Commodity indexes still have plenty of appeal. Their combined
investment has risen to around $40 billion, of which $30 billion is
in the Goldman Sachs Commodities Index (GSCI). The Reuters CRB Index
<.CRB> of 17 commodity futures has climbed to a 24-year high.
Long-term price strength should eventually lure reluctant
producers to hedge and ensure much-needed investment in
infrastructure, analysts said.
"The more investor interest in commodities the better," said
Hilary Till, a principal of hedge fund Premia Capital Management. "It
provides more liquidity for producers to be able to hedge forward
production and take on riskier projects."
Goldman Sachs says there is room for growth. In dollar value, the
open interest of all commodities bourses is under 10 percent of the
world's annual commodity output, Iglehart said.
"Even at around $50 a barrel, oil still looks like an investment
opportunity. The current commodities boom is not like previous ones.
We are seeing the results of years of under-investment in commodities
infrastructure and prices are likely to stay strong," he said.
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