Deutsche Bank (NYSE:DB) has told clients to get out of commodities. The bank says China is slowing, oil will return to its “marginal cost of production” – somewhere between US$60 and $80 – and gold will settle around $650.

Dan Denning in The Daily Reckoning Australia says you have to take what analysts tell you with a fistful of salt. Most of the time they’re just morons who are making it up as they go along. The case for resource has yet to be disproven…

Remember, the world’s population has doubled since 1960, from three billion to well over six billion. The first two great periods of industrialization in Europe and North America brought more resources on-stream, and thus, lower prices for tangible goods.

There was a lot of coal in Newcastle and West Virginia, and a lot of farmland in Kansas. But now, the latest period of industrialization begins with more people than ever chasing scarce resources. China is not Kansas.

It could be that demand for resources will fall (as it appears to be doing simultaneously all over the planet). It could also be that in some sectors, supply will finally catch up (this appears to be what’s happened with base metals). But what’s really changed in the last month is that investors are simply demanding fewer resource shares. That’s it. It’s important to distinguish investment demand from real demand.

The trendy investors who want to own the latest “It” sector will be back. Let them go trawl for beaten down financials and retail stocks. If you missed out on the first phase of the boom, this will be your next best chance to get into long-term positions at much lower prices. Those prices may not go anywhere for a year, mind you. But at least it won’t be so crowded in the aisles while you browse through firms, projects, and management.

What we have in the commodity and credit markets now is what the geopolitical crowd calls a kind of “durable disorder.” Things can remain disorganized a lot longer than a neat freak would prefer. Replacing one global currency regime with another isn’t easy, is it? Yet we still believe that’s what you’re witnessing and living through: a grand changing of the economic guard.

Source: Deutsche Bank Tells Clients to Get Out of Commodities