Still Strong Fundamentals for Commodities

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"On a longer term basis I'm still very comfortable with commodities," said Jonathan Blake at Baring Asset Management. "The fundamental drivers on a longer-term basis remain in place."

Investors' love-affair with commodities has cooled in the face of the global banking crisis but fund managers and analysts say strong long-term fundamentals for oil, metals and crops are still likely to attract money...

But they still see commodities as a major portfolio diversifier with a convincing long-term bull story -- the finite natural resources of the world struggling to meet insatiable demand from emerging countries like China. "On a longer term basis I'm still very comfortable with the story," said Jonathan Blake at Baring Asset Management. "The fundamental drivers on a longer-term basis remain in place."

A bull market in commodities spanning oil, metals, gold and agricultural products helped these assets outshine sagging equities and bonds for most of this year. The S&P GSCI commodity index gained more than 40 percent in the first half of 2008, according to Reuters data, when major equity indexes were down more than 10 percent. But commodity prices started to lose ground in August as high prices started to crimp demand, particularly for oil.

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