Yesterday afternoon, Bloomberg reported that commodities finished their best first half in 35 years, as the Reuters/Jefferies CRB Index of 19 raw materials rose 29% through June 30. However, well-known contrarian investor Marc Faber told the financial news outlet that demand for industrial commodities, including oil, will fall, along with prices. Bloomberg’s Monica Bertran and Millie Munshi wrote:

“The industrial-commodity complex is vulnerable because demand will slow down,” said Faber, publisher of investment newsletter the Gloom, Boom and Doom Report. “The economy is weakening, corporate profits will disappoint, valuations are not particularly attractive, and the financial sector that serves to channel savings into investment is in disarray.”

Demand for commodities will fall after raw materials including oil, corn, copper and gold touched record highs in the first half, Faber said in an interview on Bloomberg Television. The global economic slowdown will last a “very long time,” he said.

Photo by scol22, stock.xchng

Discussing the $400 billion in write-downs at banks and securities firms worldwide, the Swiss-born investor said:

“The financial crisis has been the appetizer. We still need the main dish.”

Source:

“Commodity Demand to Drop as Growth Slows, Faber Says (Update1)”
Monica Bertran, Millie Munshi
Bloomberg, July 1, 2008

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