Ground Floor: I shouldn't, of course, have been looking at property in Dubai a few weeks ago. Much better instead to have headed off to the gold souk and purchased a few glittering chains. If I'd done that, I'd be sitting pretty now in more ways than one.
At the end of last week, the price of gold reached $600 (€495) an ounce for the first time in 25 years and analysts are talking about four-figure prices for the commodity over the next four to five years. My small collection of gold earrings might yet provide for a decent retirement!
With political unrest dogging the globe, attention has turned again to precious metals rather than traded currencies. Gold, as always, is the favoured safe-haven commodity and the price has been moving up steadily since the beginning of the decade. But over the past year, the surge has been significant, with a 40 per cent rise in the past 12 months and a 16 per cent rise since the beginning of 2006.
According to chartists, $625 an ounce is a resistance level and they are calling for profit-taking now or at close to those levels before, many believe, investors pile in again. However, commentators are anxious, since gold is generally flavour of the month whenever inflationary fears begin to grip investors.
Although central banks are tightening interest rates to choke off imminent inflation, it seems that not everyone is convinced.
It's a good time to be a commodities trader. I met a few of them in Singapore and they said that business had been brisk, not just in gold but in other precious metals as well as zinc and copper. Over the past five years, commodity prices have risen almost inexorably. The issue for copper is that inventories have fallen because even though there is considerable demand (thanks again to booming economies like China and India) the mining companies are sceptical that prices will remain at these levels.
It seems like an incredibly conservative stance, even allowing for the fact that copper prices have quadrupled over the past four years and closed recently at their highest levels in 17 years. The price rise is driven by commercial demand, but also by hedge funds, which are investing more into commodities because they see a supply shortage which can be exploited. Copper inventories, which are monitored by the London Metal Exchange, have dropped and stockpiles have plummeted by 53 per cent in the past year.
There was a production shortfall of 54,000 tonnes last year, according to Credit Suisse, which would make it the fourth year in a row where supply lagged. At the same time, a strike at Mexico's second-biggest copper mine has helped push prices even higher.
A study published in the Proceedings of the National Academy of Sciences in January this year comments that global supplies of copper, zinc and other metals - which are, after all, finite resources - may not meet the world's future demand, on the basis that developing economies will demand the same level of services as developed nations. The researchers suggest there is an environmental and social consequence of metals depletion and that all of the world's copper ore and all of the copper in use would be needed to give the world the same level of services and products available in developed countries.
They estimate that 26 per cent of extractable copper and 19 per cent of zinc is lost in waste and that prices still don't reflect these losses. They conclude that the metals aren't at an imminent risk of depletion but others, such as platinum, may be depleted in this century because we have not yet found a suitable substitute for them.
The average use per person of precious metals keeps rising.
The scientists are taking a long-term view and it could well be that between now and the end of the century we will have moved on from base and precious metals to new ways of delivering technological services. But in the meantime there is no getting over the fact that commodities are the trade du jour. Credit Suisse revised its 2006 forecasts for copper and zinc - up 21 per cent for copper and up 41 per cent for zinc.
Meanwhile, aluminium, nickel, lead and tin are moving higher, as are agricultural goods. Not necessarily for the reasons you'd expect either. Sugar prices are at 25-year highs because investors see its potential as a biofuel.
In fact, Brazil expects to become self-sufficient in energy this year by meeting the demand for fuel by producing more ethanol from sugar cane. More than 70 per cent of the cars sold in Brazil have engines that allow them to run on ethanol. Brazilian producers comment that, for as long as oil prices remain about $30 a barrel, ethanol is a cheaper alternative.
So there you have it. Forget about complex funds which promise much but deliver little. Off you go to your local jewellery store and stock up on a few pretty baubles which will make you look good while earning you money at the same time. And while you're at it, stockpile the sugar lumps too.
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