Asset Allocation for the Next Decade

What is the best asset allocation for the next decade?

Jimmy Rogers would love this next sentence: investors are moving out of paper assets into hard ones at the same time that world population is growing and demanding more of non-paper assets, namely commodities. Therefore the best asset class going forward is non-paper assets, but this is not necessarily real estate. It’s not stocks, bonds real estate or currencies but commodities, especially commodities feeding hungry mouths or meeting the industrialization needs of China and its insatiable factories.

In fact the best trades of 2011 are probably certain commodities as well. This video explains the overwhelming case for commodities and which ones the hedge funds are investing in without using futures margin account. That’s not how the game is played anymore because the hedge funds are all using commodity stocks and ETFs, as this video explains.

Click here to watch “How the large investors and hedge funds are playing the commodities boom,” which reveals what the big trends are today

Commodities are assets that are in short supply, and that lack will grow over time as in the arguments behind Peak Oil. They are enjoying an exponential growth in demand due to world population growth, industrialization, and the fact that in many case it takes five to seven years to bring new supplies online.

We are already several years into what is probably a long secular bull market for commodities and their prices have risen a lot. Inflation is here, agricultural prices are going up and that will be the way of the future from the simple laws of supply and demand. For instance, on October 8 of 2010 the USDA cut its forecast for the U.S. corn crop by 3.8%. Grain futures skyrocketed. The USDA issued a global outlook just recently again and the news is not good. U.S. corn reserves will most likely drop to their lowest in 15 years by next year. Soybean reserves are projected to fall to their lowest levels in three decades.

Here’s what’s happening around the world …

Australian floods have cut the wheat crop projections by 2%. South American droughts will cut Argentina’s corn production by 6%. Russia is suffering from more wheat production troubles again. Global warming is messing with weather patterns everywhere. Corn, wheat and soybean prices are jumping. The U.N. Food and Agriculture Organization had its index of global food prices setting a new price record, higher than during the crisis of 2008 that caused food riots across the developing world. Sovereign wealth funds are buying agricultural land in African and other states to guarantee a portion of their food supplies going forward.

Want to find out how to play this other than the ETF’s (MOO), (DBA), (JJG) and the stocks Mosaic (MOS), Monsanto (MON), Potash (POT), and Agrium (AGU)? Watch this video because the big wealth families are putting their monies in commodity plays, but not with futures…

Click here to watch “How the mega-wealth investors are secretly playing the commodities boom,” which reveals what the big trends are today

As to the minerals, copper prices will never see 85 cents a pound again. Oil, which has in fact become the new global de facto currency (along with gold), will probably see $100 sometime in early 2011, perhaps spiking as high as $120. All in all, asset allocation for 2011 and the next decade will start shifting toward real assets other than real estate, and especially minerals and commodities.