This leaves less than 1% of the world’s water supply for its 6.87 billion human inhabitants, crops, and livestock.

Even worse, our tiny portion of the world’s water is becoming increasingly polluted and is consumed at unsustainable rates.

Fortunately, Paris based Veolia Environnement (NYSE: VE) has everything it takes to help us avoid the looming global water shortage and pad our portfolio.

With operations in 66 countries, Veolia provides water and wastewater management, transportation, and energy services to countries in desperate need of fresh water.

In fact, Veolia operates in all five countries considered to have the most potential for growth in the water and wastewater industry. And with roughly 20% of the world’s population, China is at the top of this list.

Currently water pollution plagues 90% of Chinese cities.

Luckily for the Chinese – and Veolia stakeholders – Veolia Water operates in 20 of 34 Chinese provinces and has contracts naming the company as the sole water supplier for 30 million Chinese citizens.

And the best part? These contracts aren’t just for 2009; some span up to 50 years!

Due to dire need for potable water and increasing infrastructure, Veolia can expect growth in China of up to 25% per year.

The Infrastructure Behind Water

Worldwide spending on the improvement and expansion of water infrastructure is forecasted to grow nearly 98% by 2016. And with the United States making up less than 4% of the total demand for infrastructure upgrades, water investors must think internationally.

Strengthened by its global reach and vertical integration, Veolia is the perfect opportunity.

The company is so large that its economies of scale allow it to create greater profits that its competitors and provide investors with a higher return.

Even in this year’s struggling economy, Veolia distributed its most impressive dividend in company history– at 5.74% of its share price.

Because of the difficulty small water companies face and growing costs associated with finding and treating freshwater, experts expect to see increasing consolidation in the industry.

Veolia’s positioning ensures that the company will remain a market leader throughout the market overhaul.

By aligning itself with equipment manufacturers, the company has built its own desalinization plants, giving Veolia control of its processes from the collection of wastewater to the servicing of end users.

Now, government stimulus packages all over the world are supplying billions for infrastructure upgrades ($90 billion in the US alone).

With gains of over 50% in the last six months, Veolia shareholders have had their appetites whetted … and are thirsty for more.

Source: Veolia Environnement SA (NYSE: VE): Stock of the Day

Of course that doesn’t mean that they aren’t still making money.

Exxon Mobil (NYSE: XOM) reported that profit dropped 66% last quarter. Although it still made $3.95 billion, it’s just not making money hand over fist like last year.

In a eerily similar report, Royal Dutch Shell ADR (NYSE: RDS.A) said that it’s profit dropped 67% to $3.82 billion. ConocoPhillips (NYSE: COP) fared even worse, with profits plummeting 76% to $1.3 billion.

Hard times indeed in the petroleum industry.

This all comes on the heels of a volatile market in oil prices, regulators considering limits on oil speculation, and oil stockpiles fluctuating.

The real reason oil supplies have been moving so much is the contango situation that caused millions of barrels of oil to be stored offshore in tankers. As the capacity has opened up some of this oil is migrating ashore – but not much.

This is skewing the supply numbers up and down depending upon the pricing and motivations of the sellers.

Oil is opening up at almost $67 a barrel today, and it’s easy to see how supply and demand pressures will keep that fluctuating for a good deal into the future.

Source: Oil Companies Still Making Piles of Money

That’s a very simple statement, but it’s backed by three powerful points:

• Commodities tend to do well when more popular investments (with retail investors) are doing poorly, and when economic conditions are less than ideal.

• When the typical economic underpinnings are at play, a “Secular Bull Market” for commodities tends to last for about 17 years. And right now, the underpinnings are far from typical – and may even be exemplary, meaning this bull-market run could last a lot longer than the norm.

• And last, but not least, we’re only about nine years into this commodities bull market, meaning that there’s probably a lot more room to run – maybe eight years, and very like even more.

Amazingly, this powerful notion of the “Secular Market Cycle” – despite its tremendous profit potential – is largely unknown to the investment masses, and is rarely discussed by the mainstream business news media. Indeed, it’s so taken for granted that it’s almost a market secret…

If you’re a long-term investor, however, you’ll ultimately realize it’s one of the most lucrative strategies you have in your investing arsenal. And most amazing of all is that it’s easy to understand, easy to deploy and easy to profit from.

Let me explain.

Investing in Commodities & The Secret of the Secular Market Cycle

Why is this commodity investing strategy so special? Well, with a finite time to invest for your retirement, it’s crucial to recognize and understand what we like to refer to as the “Secular Market Cycle,” or “Secular Cycle,” for short.

As the chart shows, a Secular Cycle, from peak to trough, typically lasts about 17 to 20 years on average (the period depicted by the chart ends in 2004, but still perfectly illustrates our concept).

And there are essentially two types of cycles:

• The “Secular Bull Cycle,” during which regular stocks increase in value, and have their Price/Earnings (P/E) ratios (earnings multiples) expand. That means that stocks get more expensive.

• And the “Secular Bear Cycle,” during which stocks tend to experience a decline in both price and valuation, with P/Es that contract. At best, stock prices move sideways over an extended period, but still see their P/E multiples shrink, since corporate earnings are growing at a time when stock prices are stagnant.

For investors, one key problem is that an overall “Secular Cycle,” from trough to peak and back to trough, can take 35 years. That’s a big chunk of a person’s wage-earning years, meaning there’s little room for missteps.

Now, there’s no point in fighting a secular market trend – not if you want your investments to grow.

So it’s essential to determine where we are in the cycle, because that will dictate expected returns over the following decade or two. And since most people only spend about 40 years of their lives investing for retirement, not knowing about the “Secular Cycle” – much less where we are right now in the cycle – leads to guesswork, mistakes and losses, instead of the clear planning that will generate the best investment decisions and, ultimately, the biggest profits.

The last commodity cycle ended around 1980. Essentially, a prolonged period of high commodity prices encouraged producers to over-develop their resources. Demand never fell off. Instead, there was a massive oversupply, and the commodities party eventually ended. Prices got pushed off a cliff, so the entire sector became lean in a hurry as profit margins imploded.

We now know how long a typical Secular Bull or Bear market will last years. We also know that the last Secular Commodity Bull was launched roughly around 2000. That allows us to conclude that we’ve easily got between eight and 11 years to go before supply catches up with the burgeoning global demand that we’re seeing right now.

Investing in Commodities – Profit Plays to Consider Now

With class over, it’s time to put your newfound insights to work, searching out ways to earn the outsized profits that will be available from the Secular Bull Market for investing in commodities.

If you prefer individual stocks, you have to get to know BHP Billiton Ltd. ADR (NYSE:BHP). This $140 billion resources behemoth is the largest diversified mining company on earth. With an enviable balance sheet and cash flow, this producer of base metals, precious metals, diamonds and energy is way ahead of the pack. With a current P/E of 11.66, the stock isn’t bargain-basement cheap, but it still represents a good value. Besides, this is a stock that you’ll want to hold all the way to the very end of the Secular Cycle.

Exchange-traded funds (ETFs) and exchange-traded notes (ETNs), on the other hand, provide investors with more direct exposure to commodity prices, as opposed to exposure to the stocks of the commodity-producing companies.

Finally, you’d be wise to get some gold exposure, too – gold miners can also be an excellent hedge against inflationary pressures.

In this case, the Market Vectors Gold Miners ETF (NYSE: GDX) – composed chiefly of major gold miners – offers both company and geographical diversification, while including substantial leverage to the price of gold. GDX is based on the AMEX Gold BUGS Index (HUI), which represents a portfolio of 15 major gold mining companies that do not hedge their gold production beyond a year and a half.

In the next couple of years, as U.S. and overseas economies recover, commodities producers will pay the price for recent major cuts in production, development and exploration – discovering it will be very tough to boost output even as global demand soars.

Shrewd investors will reap the benefit of those decisions: Those shortages will persist, providing quite a tailwind for soaring prices.

Just make sure that your sails are fully deployed.

The bottom line: As you go about rebalancing your portfolio – or continue rebuilding it as a result of the financial-crisis carnage – make sure to include room for a solid natural resources allocation.

Source: Investing in Commodities: How to Buy Gold During Secular Market Cycles