Still, the long-term fundamentals of commodities, particularly of oil, are by far more compelling than the those of US equities — this especially since according to several leading historians, including Arnold Toynbee, rising commodity prices have always turned up the war cycle, as the drive to secure the supply of finite and scarce resources intensifies. This should be particularly true for China, whose economic Achilles heel is a lack of water, food, oil, and other industrial commodities. I fear, for instance, that Iran is secretly developing nuclear arms and when this escalates into a new war in the Middle East, oil prices will rise substantially.

Figure 1.10 illustrates that most crude oil we consume today comes from poli­tically rather unstable countries.

1.13