We have been noting with more than the usual concern, the recent tensions in the Middle East. Israel, the Palestinians and Iran seem to us to be much more vehement and fixed in their positions than has been the case in recent years. We would not be surprised to see some serious fighting in the region, over the next few months. We are concerned that fighting could set world stock markets back, especially if oil flows are affected.

We are making no prediction just mentioning to our readers to have your personal antennae up. If fighting breaks out oil and gold will rise.


I am taking this opportunity to forward to everyone this remarkably clear article, by Martin Wolf of the Financial Times, on energy demand for the remainder of the 21st century. Of course, the thing that attracts me to this article is that I agree with it. Moreover, it is coherent, lucid and it implications cannot be missed.

It explains what I have been saying to our readers for years. We have been saying this and the article corroborates, that the rise in global energy demand is not a short term phenomenon. In fact, it is here to stay, and there are many very strong historical precedents for its continuation.

The historical background and current economic realities both argue persuasively, for a steady rise in energy demand for many decades to come. I suggest that you read the article, to gain an important insight into how energy demand will operate in the future. The link to the article is below.


One of the key messages of Mr. Wolf’s article is that five billion of the world’s six billion people live in agrarian economies, or about one billion people live in developed economies. If even only a relatively few, say 20%, of the agrarian people join the industrialized system over the next century, global consumption of energy will increase a great deal. This is because, as their economies go from agrarian to industrial, the consumption of energy per capita is much faster, than when an industrial economy like Japan, U.S. or Europe goes from manufacturing based to service oriented. This continued migration from agrarian to industrial growth guarantees a large increase in global energy consumption over the next century.

So you say to me, “Who cares about the next century! What if India, Russia, Brazil and China have their growth slow down in the next two years, will I lose my shirt?”

In our opinion, economic growth will be reasonable for the next year or two. We could have some rocky months in world stock markets between now and October. However, by October we expect things to be better, and we expect to be shopping for bargains at the global stock market bazaar.

In short, interest rates may rise and economic growth may slow. However, India, Brazil, Russia and China, will be the engines of global growth and they will grow fast enough to avoid a serious global economic recession.