Buddy, can you spare a planet?

According to a recent report from The WorldWatch Institute, if China and India were to consume resources at the current U.S. per capita level, it would require two planet Earths just to sustain their two economies.

And by my own figuring, if everyone else in the world wanted to live like us Americans, we'd need yet ANOTHER Earth. That makes four.

We don't have any spare planets lying around, and that's why a global struggle for resources is likely to define the 21st Century.

I strongly believe that we should see at least another 10 years of a commodity bull market. And we may be in a commodity supercycle — the rare but oh-so-powerful kind of event that saw America turn from a sleeping giant of the 19th Century into the powerhouse of the 20th Century. India and China may be making that transition right now.

If so, look out! Commodity prices could go higher, longer and faster than most people dream possible.

The study by the World Watch Institute is confirmed by another recent study by Yale University researchers showing that all of the copper ore in the world, if it were mined and refined, still wouldn't be enough to bring developing nations (like India and China) to the level of North America for power transmission, construction and other services. The same problem exists for zinc and other base metals. That's according to researchers Robert Gordon and Thomas Graedel.

Those countries have their sights set on being world-class economic powers. They want it so badly they can taste it. That means they MUST get copper and other metals, no matter what it takes.

A Perfect Storm is Forming
In Commodities

Americans are worried about a new energy crisis — and they should be. But they should also worry about possible shortages of base metals — copper, nickel, coal, zinc and more.

Meanwhile, the supply demand squeeze in precious metals has the potential to send gold to $800 and beyond.

It's all part of a bigger trend that should lift many commodities out of their ordinary cycle and into a new "supercycle."

A supercycle does not come every year or even every decade. In fact, we've only seen three in the last 150 years.

In the past few years, we've already seen the milder, Phase I of the supercycle.

It was during that phase that big names in the natural resource sector — Newmont Mining, Conoco Phillips, BHP Billiton, Rio Tinto — saw their share prices go up by 136%, 197%, 326%, 490% and more.

Many on Wall Street are eager to pronounce the commodity boom "dead." This is not the first time they've responded to corrections with that kind of rhetoric nor do we believe it will be the last.

Quite to the contrary, we see forces at work that could send the prices of these commodities far higher and sooner than most on Wall Street now believe likely.

One big difference between Phase 1 and Phase 2 of the commodity supercycle: In Phase I, it was some of the larger companies that consolidated. This time, it looks like it's the turn of smaller companies — small- and mid-caps to join the party in a big way.

Indeed, in Phase 2, venture and investment capital is already becoming more readily available to smaller companies. At the same time, the larger blue chips, flush with cash, are starting to eye smaller companies to acquire. Almost invariably, it's faster, easier and less expensive to acquire a small company than to hunt for new resources.

In Phase I, most investors participating in the rise were niche investors with good experience in previous commodity booms many years ago. In Phase 2, however, you can expect a broader group of mainstream investors to join. They recognize they missed Phase I. They see now that the bull market in natural resources is for real. And so they're clamoring to jump in.

Later, this could lead to "irrational exuberance." But that's still a few years away. Currently, this new round of participation is healthy. It will add liquidity, volume ... and buying pressure to the marketplace. And it could richly reward investors who are able to buy early in Phase 2.

Emerging Markets Are
Driving the Supercycle

Yes, China is one of the driving forces in the commodities supercycle. But it's not just China. It's India and Brazil ... everywhere that business is booming, and people are becoming wealthier.

The more wealthy people become, the more products they consume. People who lived in shacks are moving to cinderblock houses. People who had thatched roofs are able to buy aluminum roofs. If it's hot, people buy air conditioning. That increases demand for steel, copper and energy. The commodity supercycle cranks even higher.

Cars ... refrigerators ... air conditioners ... all require steel. If you want galvanized steel, you'll need zinc. And if you want to make stainless steel, you're going to need nickel ... lots of it!

Let's crunch some numbers ...

• Today, China has per-capita income of $5,300 per year — about 14% of U.S. per-capita income. China's economy is growing at a rate of over 10% a year — sowing the seeds of a massive consumer economy.
  
  
• If China were to have the same number of cars per people as the U.S. — three for every four people — it would have close to a billion cars. Currently, there are only 800 million cars in the entire world.
  
  
• The U.S. burns 2. 2 tons of coal per person per year. If China used that same amount of coal per capita, it would use three billion tons of coal per year!
  
  
• China is already the world's largest consumer of iron ore, steel and copper. It sucks up half of the world's supplies of cement, a third of its coal, more than a third of its steel, and a fourth of its aluminum.
  
  
• And don't get me started on China and energy. China has accounted for 40% of global growth in the oil demand in the last four years, according to the US Department of Energy, and its consumption is growing at a double-digit rate.

Now imagine the same story playing out in India, where an IT and industrial boom is helping to lift millions out of poverty ... in Brazil, where the commodities boom is fueling a rip-roaring economy ... and in virtually every developing country on the planet.

Over 1.3 billion people in China and another billion in India are making the transition from bicycles to scooters to cars. They're buying new homes, kitchen appliances and electronics. They have more spendable money in their pockets. Many are suddenly taking a giant leap from the 19th century to the 21st.

Where Does China Invest Its Money?

I talk to international investors a lot. Many of them have questions about investing in China, a place where they're eager to put their money to work. So I have a question for them: Where is China investing its money? If I wanted to get rich off China, that's what I would want to know.

And the answer is that China puts most of its overseas investments (outside of buying U.S. Treasury bonds to prop up the ailing greenback) not in Japan ... or Thailand ... or anywhere in Asia. It's Latin America. Some facts ...

Fact #1. Latin America surpassed Hong Kong as the largest recipient of overseas investment from China. With an economy geared for manufacturing and growing at close to 10%, China is Tony-the-Tiger hungry for resources, and Latin America is a good place to get them.

Fact #3. China's trade with all of Latin America is booming. In 1975, total trade between China and Latin America was just $200 million. In 1998, it had reached $2.8 billion. By 2004, it climbed to over $36 billion, THIRTEEN times more.

I can attest to this from personal experience. Not long ago, I stood at the edge of the Panama Canal and watched one container ship after another parade through, stuffed with Brazilian raw materials on their way to the Far East. China buys huge quantities of Brazilian bauxite, iron, zinc, soy and lumber.

Deals, Deals and More Deals

Trade between China and Latin America was helped along by a 2004 visit to Latin America by China President, Hu Jintao.

He toured Brazil, Argentina, Chile and Cuba, signing 39 bilateral agreements to improve trade, tourism, and more.

Then in 2005, China's Vice President, Zeng Quinghong, traveled to Venezuela, Mexico, Peru, and a host of other Latin American and Caribbean countries, negotiating new trade and investment agreements every stop along the way.

These are just SOME of the deals China is working on in Latin America right now ...

• China is investing $500 million in a Cuban nickel plant and prospect for nickel throughout Cuba. (Cuba is a big source of nickel, as well as supplying 10% of the world's cobalt).
  
  
• Minmetals, a Chinese mining company, is making plans to open a huge new copper mine in Chile.
  
  
• Petróleo Brasileiro (Petrobras), Brazil's state-owned oil company, inked a deal to sell China 12 million barrels of crude oil. The deal is worth $600 million a year, and Petrobras hopes to expand it to $1 billion a year.
  
  
• Peru signed an $83 million contract with China National Petroleum Corporation allowing the Chinese firm to explore for oil in the country's southeastern rainforests.

The Biggest Relationship of All?

Two of the world's largest countries in the world: Brazil and China.

The sign: Their leaders, Luiz Inácio Lula da Silva and Hu Jintao, are coming together like a Roosevelt and Churchill to establish a political, economic and financial alliance to challenge the U.S., Europe, Japan and Russia.

Overall, China's imports of raw materials from South America are expected to reach the $100 billion-per-year mark by the end of this decade. China is already Brazil's third-largest overall trading partner and Argentina's fourth largest.

Speaking of Brazil, during his visit, China President Hu offered $7 billion in port and railway improvements to Brazil. China is also building the world's second largest dam in the Brazilian Amazon. The energy from that dam will go to power mines that provide raw materials ... to China.

The fact is, Latin America is going to ride the global commodities boom for many years to come, and a lot of stocks in Latin America are cheap, cheap, cheap!

Now for the good news: There are plenty of small- and mid-cap companies listed in the U.S., Australia and Asia that are making money on the China natural resource story.

Australia Sells Natural Resources
By the Boatload

Australia exports commodities all over the world. And China isn't its major customer. That honor belongs to Japan, which buys Australian beef by the boatload. But with 1.3 billion consumers, China is coming on strong.

Australia's exports run the gamut. Not only beef, but also coal, iron, crude oil, gold, alumina, wheat, nickel, aluminum, liquid natural gas, copper, wine, wool, dairy products, iron and steel. Whew!

Growth in Australian exports to China has accelerated, averaging 19% annually for the past five years. China is Australia's second-largest trading partner.

In just a decade, measuring the three-year period ending in 1995 versus the three-year period ending in 2005, Australia's exports to China
soared ...

• Wheat up 7.2% to 835 kilotons.
  
  
• Steel up 1,883% to 852.7 kilotons.
  
  
• Copper concentrates up 920% to 23.7 kilotons.

Exports of aluminum up 370% ... Oil up 580% ... zinc concentrates up 2,359% ... in all, Australia's commodity exports to China jumped 197% in that decade.

And Australia is working on a free-trade agreement with China. Such a pact, according to a government report, would ...

• Boost Australia's real gross domestic product by US$18 billion over the period 2006-2015.
  
  
• Raise China's real GDP by up to US$64 billion over the same period.
  Coal is Australia's largest export — worth about A$23.2 billion in 2006.

Coincidentally, China gets most of its electrical generation from coal. However, most of Australia's coal does not go to China (it goes to Japan). Indeed, the potential growth in Australian coal exports to China is huge. And one area I think has particular potential is gold.

Australia's Lucrative Gold Trade
With China is Just Beginning

Australia's gold industry, long in a slumber, is a sleeping giant. Australia is on the path to overtaking South Africa as the world's biggest exporter of gold.

Natural buyers for that gold are China and India. Between them, China and India have 2.3 billion people with a cultural affinity for gold.

There are some great U.S. listed stocks that will make the most of this coming boom — and if you look on the Australian Stock Exchange, the opportunities are enormous!

The Little Giants of
Asian Commodities

The up-and-coming success stories in Asian economies are often driven by commodities. Here are some examples ...

Vietnam, for example, is a significant exporter of oil, as well as rice, coffee, rubber, pepper, cashew nuts, and tea.

Papua New Guinea has a potential bonanza in oil, gas, and minerals that have yet to be exploited. A nine-year secessionist revolt on the island of Bougainville not only claimed 20,000 lives, it stifled development of a potentially rich copper mine. Still, mineral deposits account for nearly two-thirds of export earnings.

Mongolia is trying to export its way out of extreme poverty. It has a booming export trade in copper concentrates, silver and gold, and cashmere. Exports are jumping, but are concentrated in a few areas, so Mongolia is particularly vulnerable to an economic downturn.

The Republic of Korea (South Korea) is well-known as an exporter of finished goods — electronics, cars, telecommunications equipment and ships. Over 50% of Korea's exported commodities are various types of machinery. But the country also exports iron, steel and plastics. It's both a big consumer and refiner of commodities.

Others: Thailand is the world's largest exporter of rice and has oil and gas fields as well ... OPEC member Indonesia has oil and gas fields that are declining, but could be revived with more investment ... Japan is a huge market for commodities it uses to make its finished products ... these and others are part of the big commodities story in Asia.

Pursue Profits All Over the World

Latin America, Asia and Australia are just some of the arenas where the race for resources will play out. And there are plenty of U.S. stocks that will ride the wave of the global commodity boom.

In this special report, we'll look at the potential in three areas of the commodity supercycle — energy, base metals, and precious metals.

Energy —
The Great Game is On

There is a "great game" between China, India and the U.S. — a three-way race for energy resources — that promises to send select energy stocks soaring ... and potentially make nimble investors very wealthy. That's the good news. The bad news is that Uncle Sam, once a heavy favorite to win this race, is in danger of losing.

• A warmer winter sent fuel demand — and oil and natural gas prices — tumbling. Many investors seem to be blind to the fact that weather can work against you as much as for you. A hot summer could fire up demand at the 17% of U.S. power plants that use natural gas — and send prices soaring.
  
  
• They've also forgotten that hurricane season started in June, and that will put the Gulf of Mexico's oil and gas production at risk.
  
  
• Our relations with the Muslim world seem to be getting worse by the day. A shooting war with Tehran seems like a real possibility. Meanwhile, India and China are strengthening their ties with Iran and other nations in the Middle East.

A Real Crisis May Be Closer
Than Any Are Ready to Believe

Oil reserves are falling all over the world. In the North Sea, production is falling off a cliff. Even OPEC's output is lagging. Kuwait's largest oilfield — the Burgan — hit peak production last year.

Things may be worse than most of the world realizes: According to Petroleum Intelligence Weekly ...

Kuwait's oil reserves may be only 48 billion barrels ... or less than half the officially-estimated 99 billion barrels. With Kuwait accounting for a whopping 11. 7% of all global reserves, that's an explosive revelation.

To give you some perspective on the amount in dispute, the total oil reserves of the US are estimated to be about 22 billion barrels.

That's right — an amount equal to TWICE all the oil reserves in the U.S. may be missing.

Plus ...

Iran's oil production is in trouble, too. All nine of Iran's major fields, which produce 90% of its oil, are past their peak.

At the same time, domestic oil consumption is growing.

As a result, Iran's oil exports — which were 4 million bpd during the reign of the Shah — have slumped to about half that today.

Iran can't even keep up with its own OPEC production quota!

Another former OPEC exporter, Indonesia, has seen its production fall so sharply that it's now an oil importer.

And other OPEC members are seeing their major oil fields, discovered 40 or 50 years ago, come under increasing strain to keep up.

Private companies are coming up short, too, and downgrading their reserves. There is new oil out there to be found, but it is expensive. The days of cheap oil are disappearing in the rear-view mirror.