But we’re not done yet. The Senate Commerce Committee hears today from none other than George Soros, who, according to the Financial Times, will “tell US lawmakers that ‘a bubble in the making’ is under way in oil and other commodities and that commodity indices are not a legitimate asset class for institutional investors.”

Not that there aren’t fundamental factors at work in the commodity boom, Soros believes, but the boom is being transformed into a bubble as institutional investors pile into commodity index funds. According to his prepared remarks, “When the idea was first promoted, there was a rationale for it … But the field got crowded and that profit opportunity disappeared.”

“Nevertheless, the asset class continues to attract additional investment just because it has turned out to be more profitable than other asset classes. It is a classic case of a misconception that is liable to be self-reinforcing in both directions.”

As I’ve pointed out before, a primary reason institutional investors are piling into these indices is that they’re shelter from a falling dollar. As fiat paper is inflated into infinity, hedge funds and pension funds seek shelter in real, tanigble stuff.

I’m sure Soros knows this. Whether he’ll actually address this aspect of it today is another matter. Obviously, with such famous trades as his bet against the British pound in 1992, Soros knows a thing or two about falling currencies and how to make money off it. So I’m not really sure what he’ll be getting at today with his testimony.

And here’s something even more puzzling: “Mr Soros will say a crash in the oil market ‘is not imminent’. But he says it is desirable to discourage commodity index investing – or the ‘elephant in the room’ in the futures market – though not with more regulation.”

If more regulation is not the solution — and surely it’s not — what on earth is he doing testifying before a committee that’s looking for scapegoats and excuses for more regulation?

Source: Just What is Soros Getting at?

But, weirdly, it’s created a unique profit opportunity in an area where hardly anyone expects to find one.

Where is this unlikely profit play?

Shipping.

Let me explain. To get goods from the county of their origin to your local supermarket shelf, they need to be shipped over.

It’s not just food – everything from building materials to oil to clothes to manufacturing equipment has to be transported from one side of the world to the other.

And as more and more countries demand more and more resources, the world needs more and more ships to get them there.

It’s helped fuel the biggest ship-building boom in recent history.

But then the credit crunch comes along and ruins the party!

You see, in order to build these vessels, ship builders need to raise the cash to pay for them. For the majority of ship builders this is paid for on credit. So anticipating more future demand for ships… they ordered more to be built!

Trouble is, banks are now too afraid to lend money. Tightening credit markets mean lenders demand bigger deposits and shorter terms for financing.

It means a lot of these new orders are being cancelled…

One Hong Kong-based shipper recently cancelled an order for two ships even though they had to pay $4 million to get out of the contract.

We’ve already seen as much as $14 billion in ship orders threatened by cancellations and delays.

That’s equal to 94% of annual revenue at the world’s biggest shipbuilder, Hyundai Heavy Industries Co. And that number could be about to rise too.

Today there are 2,561 new cargo ships on the order books. So, with a loss or delay of 10%, there are going to be about 250 fewer cargo ships available then predicted.

Fewer ships at a time when global demand for everything from soybeans to coal are at record levels.

I think you know what I’m getting at…

Why this is a massive profit opportunity…

Last Friday the futures markets showed shipping rates were expected to fall 56% during the next three years.

But I’m betting that that ISN’T going to happen. Instead, cancelled ship orders will support shipping rates.

It means that some of the most exciting shipping companies globally are trading at valuations that don’t reflect their true potential.

I believe this will be realised by the market very soon… and investors who own one particular stock before they do could make a serious amount of money.

But if investors are going to profit from this, you’ll have to move fast because the impact of those cancellations is already becoming apparent.

The Baltic Dry Index, which measures freight rates, has risen 58% in the last year while an index tracking the number of cargo ships under construction has fallen 21% over the same period.

And that’s been fantastic news for shipping companies.

But as the impact of the credit crunch on the shipping industry become clearer, we’re betting that there are still huge profits to be made here.

Just yesterday, Japan’s second-biggest shipping line, Mitsui O.S.K. Lines Ltd, announced that its first-half operating profit will beat forecasts by “several billion yen” as it raises rates to transport coal and iron ore.

We at Profit Hunter are going right to the heart of this trend. Growing demand from Asia is at the heart of the current shipping boom – and that’s where we see the biggest profits to be made from it.

Right now we’re looking at one Asian shipping company that we believe is still trading for well below its potential… and they could make substantial returns for quick thinking investors.

If you’d like to take a no obligation trial of our service, you can expect to hear from us with all the specific details on this very shortly.

Regards,

Manraaj Singh

Editor
Profit Hunter

Source: A Profit Play The Credit Crunch Created