Invest In Finite Resources
August 20th, 2007
Finite resources, whether it is a precious metal or a rare human skill or product, can make some of the best investments. Our currency system isn’t perfect. We’ve basically created a system whereby the government can print an infinite number of dollars to purchase finite resources. Eventually people catch on and the value of a dollar will start to decrease and the value of finite resources will only get more expensive. As a hedge against a falling dollar, I urge anyone reading this to consider investing in finite resources. Inflation may become a problem and it is something you should be somewhat prepared for in case it does.
Humans are an odd bunch, they really are. They want more and more. With more than 6 billion people on this planet and counting, there is no shortage of wants and desires. Whether it’s a car a house or a super fast computer, these wants and desires must be fulfilled by using finite resources. Our planet only has so many resources but a seemingly infinite number of human wants. As the desire of a good goes up so does its value. It all comes back to the fundamentals of supply and demand. Demand in these cases can be almost infinite the way humans often act. But supply is where the system is limited… we only have so many natural resources on this planet and that is the hard truth. If you really want to capitalize on that simple truth, then invest in finite resources.
Think about it for a second; the rest of the world is beginning to industrialize and everyone wants a nice house and a car. In order to build billions of more cars and homes it will take a lot of resources. Demand will continue to rise for resources but the supply, which is limited, will lag behind causing the value of the finite resources to increase. Combine these simple supply and demand fundamentals with the currency situation and the possibility of rising inflation, and you can quickly begin to see that finite resources may make for some good investments. In my opinion, finite resources (like mining and exploration companies) should have a place in every portfolio.
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4 Comments Add your own
1. Mr. Cheap | August 21st, 2007 at 9:33 am
While resources are finite from one perspective, from another they aren’t.
Gold seems like a finite resource (there’s only so much of it on the planet), but its possible to create gold from lead (and if the price gets high enough, it wil become economically viable to do so) - http://chemistry.about.com/cs/generalchemistry/a/aa050601a.htm suddenly the finite isn’t so finite.
There’s only so much oil on the planet, as it get depleted prices will rise, until a comparable source of dense energy becomes attractive (hydrogren, ethanol, efficient solar power and large batteries- I’m not sure).
Investing in finite resource can actually be dangerous, because there’s no way to make sure technology won’t suddenly make it a lot easier to aquire (and therefore far less valuable). Gold prices would go down in a hurry if there was a very cheap way to make it from lead (I’d guess it would drop to almost the same price as lead).
I’m amazed at the ability of marketting to protect the value of diamonds in the face of superior, cheap, man-made diamonds (http://www.wired.com/wired/archive/11.09/diamond.html). I wouldn’t invest in Da Beers if you paid me (well, maybe if you paid me… it’d have to be a lot though). Finite becomes plentiful yet again.
Resources are finite, but they’re what the entire universe is made up of…
2. admin | August 21st, 2007 at 10:59 am
I was aware of the diamonds that can be manufactured, and that is one reason I don’t invest in diamond companies. I was not aware of the gold being made from lead, though it must be expensive at the moment if they aren’t already doing it en masse. I have heard of one instance where someone claimed to make gold from some special chemistry experiment but it was sort of buried and not heard from again…
In particular, my favorites are silver, land, uranium and oil. I know oil has lots of substitutes, and I’m actually a huge fan of solar power (Especially Sterling Energy Systems and their Solar Concentrators!) but I am also a realist and know that oil is, for now, our main source of energy (besides the sun!). I also invest in solar companies so I’m partly hedged against the fall of oil that will surely and hopefully come!!
Uranium is very important as there are a whole lot of nuclear power plants being built so the supply/demand fundamentals should stay right on track. I don’t like investing in uranium as it can be used to destroy the damn planet and I would hate to be the idiot that helped fund the building of a mine from which the contents were used to blow myself or others up.
As for silver, it is now being used in many technology applications (chips) and also as an investment tool like gold.
Gold has never been my favorite, mainly because too many other people ‘like it’ and I’m a bit of a contrarian in that regard. I hate following others.
Finite resources are still a great investment even though the entire universe is made up of them. When wars are fought, people are killed, all over these finite resources (even land is a finite resource), you know they have tremendous value.
And I consider rare products and human talens a rare resource…
3. admin | August 21st, 2007 at 11:01 am
I also forgot to mention, even when our entire universe is filled with finite resources, our governments can still print money a heck of a lot easier than we can build, manufacture or mine finite resources… as such, the finite resources can be used to hedge yourself against inflation and the falling dollar.
4. Invest In Finite Resource&hellip | August 21st, 2007 at 11:58 am
[…] reader, Cheap Canuck, made an excellent comment regarding Invest In Finite Resources. I always love a good comment with lots of thought. Here it is: “While resources are finite […]
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