Commodities and the Kondratiev Cycle

Commodities and the Kondratiev Wave
``I agree that commodity prices move in long cycles,'' said Faber, who manages $300 million at Marc Faber Ltd. ``The up wave of the Kondratiev cycle is likely to last for at least another 15 to 20 years.''

Faber devoted a 35-page chapter of his 2001 book ``Tomorrow's Gold'' to Kondratiev and other long-wave theorists, writing that once the cycle turned higher, ``it will change the entire rules of investing, because in a rising wave, commodity prices will rise, inflation will accelerate and interest rates will increase.''

The Reuters/Jefferies CRB index of 19 commodities has surged 139 percent since October 2001; copper has jumped five-fold, while oil prices have more than tripled. The U.S. Federal Reserve has raised its benchmark interest rate to 5.25 percent, from a low of 1 percent in 2003.

Faber owns mining stocks, which he declined to name, as well as gold, rare metals and agricultural land. He's underweight bonds, which he said don't perform well in a rising Kondratiev wave.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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