What I Learned About the World After Reading One Investor Letter

We’re only just getting started…

The other day I found myself reading an obscure investment letter from Goehring & Rozencwajg Associates. They’re a group of natural resource investors in New York City who you have probably never heard of. Neither have I. But this investor letter is an unbelievable read. Especially if you have any interest in investing or capturing the .

1. The world is about to be a consumption machine unlike any other time in history

“The world has never before had two major countries, each with populations exceeding 1.3 billion, that are simultaneously in the middle (China) and just entering (India) their periods of intense commodity consumption growth.”

2. Not enough people are talking about the importance of copper, which is needed for anything high-tech from AI to VR (wiring and processors) and everything infrastructure-related

“India has an incredibly low level of copper installed in its economic infrastructure at present. Our models calculate that today India has only 15 pounds of copper per person invested in its economic infrastructure versus China which has approximately 175 pounds per person invested in its infrastructure. Given this low level of copper in the economy combined with India’s 1.3 billion person population, our models tells us that Indian demand alone will add nearly 400,000 tonnes of incremental world copper demand in the next several years.”
None of this works without copper

3. It’s time to start thinking about a day when 4 billion people are in the middle class

“From the late 1960s until the early part of last decade, we calculate the world had approximately 500–750 million people residing in emerging market economies that are in their period of high intensity commodity consumption at any given time. However, with India now joining China and the rest of the SouthEast Asian countries, we calculate that over four billion people have now entered into what we call the middle of their “S-Curves” — that is, the period where commodity consumption intensity rapidly increases.”

4. The reality is that green house gases are only just getting started

“The average Indian consumes 1.2 barrels per oil per year, once again very much in line with China in 2001. Over the last decade, India has grown its oil consumption by 0.03 barrels per person per year just as China did in the decade leading up to 2001… For example, Indian vehicle sales are expected to reach 2.8 vehicles per thousand Indian citizens, which is higher than China was in 2001. Similarly, total airline passengers carried is expected to hit 90 out of every 1,000 Indian citizens this year. These figures are 35% and 55% ahead of where China was in 2001.”
Traffic in India

5. How a simple diet switch from increased wealth can impact the food chain

“As a country hits a certain level of per capita GDP, they switch from a starch-based diet to a meat-based diet. Since raising livestock is up to seven times as grain-intensive as subsisting on a plant-based diet alone, the impact on the grain markets is immense.”

It’s important to keep in mind each of these 5 points are not going to happen over night. They are estimates and assumptions that would take years or decades. It’s also important to note that they each rely on the continued growth and prosperity of India and China. But if you think India and China are global powerhouses on the rise, don’t ignore what you just read. It could be your next great investment years from now or even the start of a business aimed at one of these two countries.


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