Today's comment is by Eric Roseman, Investment Director and editor of Commodity Trend Alert.

As I said yesterday, the commodity bull market isn't over...not by a long shot. Even with the higher dollar and the temporary correction in oil prices, it's still a mistake to think we're on the cusp of a commodity bear market. 

This simply isn't the same oil bull market we saw in the 1970s. For starters, the energy sector is not as reliant on U.S. domestic consumption compared to 10 or 20 years ago.

Compared to the last oil shock in the 1970s, China was barely a factor in global consumption. Today China is the primary reason why most commodities are in a secular bull market. That's also the case regarding oil. It's a primary demand-driven trend that won't end anytime soon.

The Chinese are becoming big global consumers. Total domestic retail sales in China grew a formidable 23% year-over-year through July compared to just 0.1% in the United States. The Chinese are avid consumers and of course, major exporters. The economy will continue to grow and that means the consumption of raw materials, including oil.

Barely Any Demand Destruction in China

What some investors fail to understand is the primary source of new oil demand comes from the emerging markets, not the United States or Europe.

According to Merrill Lynch, oil demand growth in the emerging markets has never contracted year-over-year in the modern era. Although demand destruction has started in the emerging markets, the overall trend for consumption remains long-term bullish.

Oil Stocks are Cheap

A stable dollar is a plus for world growth because a lower dollar will help moderate inflation for many emerging market currencies. This should stimulate economic growth and demand for oil and other distillate fuels at a time when the global economy is slowing.       

Provided that U.S. interest rates remain low for the foreseeable future, and they will, global economic growth will continue. Oil prices will find a floor. That makes energy stocks a great buy at these distressed levels.

I've been busy buying oil and energy services companies over the last few weeks following big price declines. Most oil stocks are not priced for US$75 oil let alone oil prices north of US$100 per barrel. And compared to banks, energy stocks have real assets and real earnings!

Cash-flows for the majors in the United States, Canada, and Europe are bulging and dividend payments are still increasing. These stocks now trade at 52-week lows and should form a bottom over the next several few weeks or sooner as oil prices finally trough.

Thank God for the Chinese!

To recap, the global macroeconomic picture is nothing like it was in the 1970s. This is perhaps the most significant bullish point I can make about this big correction for raw materials. We don't have skyrocketing interest rates and double-digit inflation.

China is now a major player with regards to commodity consumption. It was almost insignificant 30 years ago. Thank goodness for the Chinese. If they didn't exist the bear market in U.S. stocks and bonds would be far more severe, the dollar would be near-worthless and commodities would be trading in the basement.

Provided that global interest rates remain historically low and the United States and Europe can eventually stabilize the ongoing credit crisis then global economic growth should reaccelerate later in 2009.

A stable dollar will also mitigate inflationary pressure globally and that's a positive development for new consumption. Also, slowing growth and lower commodities prices now will eventually open the door to central bank rate cuts in 2009 - a boon for commodities.  

The time to buy or accumulate new positions in the energy sector is now. The oil majors and the oil drillers have been smashed hard over the last six weeks and offer great value in an otherwise sluggish earnings landscape. Earnings for the oil majors and the drillers will continue to flourish even at US$75 oil, which I don't expect unless the Chinese economy collapses. And that won't happen anytime soon.    

ERIC ROSEMAN, Investment Director

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Important Change:
A Ray of Hope in the Ongoing Tax Haven Battle

If you've read my writings before, you know that politicians like to use offshore financial centers as their own personal whipping boys. In fact, every year, some new politician steps forward to spread the anti-tax haven propaganda.

These politicians like to obscure the very real progress that tax havens have achieved in recent years.

The Financial Times reports that the International Monetary Fund (IMF) reportedly is now planning to drop the artificial distinction between "onshore" and "offshore" financial centers that has been blurred by globalization.

The IMF even went so far as to admit that there is no need to compile a discriminatory list of offshore financial sectors.

In a statement the IMF acknowledged that globalization has "increased the range of cross-border transactions and intermediation in many countries, as well as by the active efforts of a number of countries to build or promote offshore business."

This is important because IMF's "assessments" are based primarily on technical reviews of each center's regulatory regime. If a jurisdiction has met the world standard requirements they should get credit.

By comparison the OECD and other critics base their attacks on purely political issues such as low tax policies, sovereignty, and alleged crimes.

Among others, the British Virgin Islands government welcomed the recent IMF decision to halt its discrimination between onshore and offshore financial centers, as did officials in the Cayman Islands.

The well-run Caymans have a lot to brag about. Recent figures from the Cayman Islands Monetary Authority confirm a key milestone by Caymans financial services industry. A record total of more than 10,000 investment funds are now currently registered there.

Under the gun from critics, the truth is that most OFCs have long since cleaned up their acts, adopting regulatory bodies with real oversight powers, requiring "know your customer" and "suspicious activity" reporting rules. The result has been that many offshore centers get far higher marks than the onshore centers when assessed objectively by IMF reviews.

By the way, it's worth noting that the majority of the billions in dirty cash laundered worldwide flows mainly through - not offshore centers - but through New York, London and other major financial hubs located in nations where tax-hungry governments hypocritically attack offshore financial centers.

BOB BAUMAN, Legal Counsel

Just How Long is the Long Arm of American Law?

As I said yesterday, if the U.S. wants to prosecute you, our court system can find a way - even if you have never set foot on U.S. soil. A collection of U.S. treaties and laws makes this possible.

For example, the U.K.-U.S. extradition treaty eliminates most evidentiary requirements for extradition. Since the United States now reportedly has access to airline passenger manifests from persons flying into our out of the United Kingdom, it can easily screen these names against those persons it wants to extradite.

So say you flew from Moscow to London. It's possible that police could take you into custody when you arrive and place you into detention. Depending on the nature of your alleged offenses, you may - or may not - be able to avoid extradition to the United States. Welcome to the USA!  

The United States can also request that you be deported to its custody, so long as you are present in a particular country, if only for a brief visit. For instance, when the U.S. Department of Justice wanted to bring offshore tax scammer Marc Harris to the United States from Nicaragua, it didn't use the U.S.-Nicaraguan extradition treaty.

Instead, the U.S. issued an Interpol notice, which many of Interpol's 186 members treat as a valid request for provisional arrest. After arresting Harris, Nicaraguan authorities deported him to the United States. Once in the U.S, they tried and convicted Harris for tax evasion and money laundering.

What if you live in a country with no extradition treaty with the United States and never travel outside that country? In that event, U.S. authorities can carry out an "extraordinary rendition" to bring you into U.S. custody. This essentially amounts to sending undercover operatives into the country, kidnapping you, and bringing you back to the United States.

Numerous alleged "enemy combatants" now awaiting trial before military tribunals at Guantanamo Bay, Cuba arrived via extraordinary renditions. And, in case you wondered, the Supreme Court has blessed the practice of kidnapping criminal suspects, even where an extradition treaty is in effect.

What should you do if you've been accused of a crime in the United States, but live elsewhere? Certainly, you should hire a competent attorney in your own country to advise you of your options.

One option might be to approach the authorities in your own country and request that you be prosecuted under its laws.

The punishment may be much less than what you would face in the United States, and under most conditions, you can't be extradited for a crime for which you've already been tried.

"This is the last book Washington wants you to read…"

– Bob Bauman former US congressman

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