The 'Age of Infrastructure' Will Gobble Up Physical Commodities for Years

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U.S. Global Investors CEO and CIO Frank Holmes suggested a global megatrend of globalization, urbanization and wealth creation is now generating "a global infrastructure boom on a massive, intractable scale." And, he added, "Megatrends increase the use of commodities, especially infrastructure, which creates sustainable jobs and massive use of commodities."

A large, more urbanized population with an improved economic status in China, India and other developing nations is igniting the age of infrastructure-including massive long-term projects that may build or expand roads, airports, transportation, housing, water, utilities or even the information highway.

U.S. Global Investors asserts that "infrastructure has become a topic of choice for politicians around the world because they can generally count on the support of the electorate. In the case of emerging markets, it is very encouraging that many political leaders openly acknowledge that future economic growth in their countries depends directly on infrastructure improvements."

Infrastructure expansionist fever is even catching in the United States, Canada and other industrialized nations of the world with a mind-boggling global $41 trillion spending program between 2005 and 2030.

And, it all necessitates the unprecedented global consumption of record amounts iron ore, cement, copper, and other physical metals, no matter how bleak the U.S. economy.

In a keynote address to the Denver Gold Group Asian Pacific Forum in San Francisco Tuesday, U.S. Global Investors CEO and CIO Frank Holmes preached the gospel of global infrastructure expansion to a very attentive audience of fund managers, institutional investors, analysts, and mining executives, all attuned to its benefits to international mining. Holmes stressed the importance of broader cycles, such as the influence of Kuznets Emerging Market Cycle, which drives commodity demands-in trying to analyze current business cycles. Kuznets, an economist who specialized in developing economies, in particular emphasized and tracked the lengthy cycles of infrastructure development.

Holmes suggested a global megatrend of globalization, urbanization and wealth creation is now generating "a global infrastructure boom on a massive, intractable scale." And, he added, "Megatrends increase the use of commodities, especially infrastructure, which creates sustainable jobs and massive use of commodities."

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