The following is a report from a mutual fund portfolio manager which may be of interest to some. The last sentence sums everything up for those who don't wish to read the entire review.

Cheers,

MGB

The financial crisis of 2008 resulted in global governments implementing the largest coordinated fiscal and monetary stimulus package since the great depression. To date it has been successful in stimulating global growth, however the downside is massive increase in government/ sovereign debt. The rebound in manufacturing activity and inventory re-stocking, after the largest de-stocking in modern times, has tightened commodity markets globally. In particular, steel and its raw materials, iron ore and coking coal have been beneficiaries of the rebound. This has lead to record high iron ore prices as china competed against the world for supply, similar for coking coal. All this is well known. Today the market is questioning if this is just a re-stocking cycle or if it has legs. The backdrop is uncertain. Since the start of the year China has been trying to cool its property market through various administrative policies. Recent reports indicate that this is having success as property transactions have slowed dramatically in the first part of April. The slow down in property construction is bringing into question the continued strength in demand for steel and other commodities. Demand in the western world is increasing and was seen as the offset to some reduced demand from China, however, the Greek debt crisis is highlighting the increased risk of slowing European growth and the risks of further credit contagion. It has also reminded the market that the second leg of the global financial crisis is coming soon. INCREASED TAXES. Australia announced a new tax over the weekend that targeted the one industry which is still very profitable and is difficult to move. The new Resource Super Profit Tax will be implemented in July 2012 and is designed "to provide a more appropriate return to the Australian Community from the exploitation of its non-renewable resources". Other governments are sure to follow as they look for ways to increase tax revenues. Recall that Alberta went down this path when oil and natural gas hit their highs in 2008. This has created uncertainty for investors in the mining sector near term, however, it will also likely result in reduced investment in new supply. This is supportive of higher resource prices longer term. Changing tax policy in addition, the uncertainty over global growth will likely persist thru the early summer months, which historically is a seasonally slower demand period. Longer term we continue believe in the continued growth of emerging markets and the resultant support it will bring to commodity prices.