Bamboo

A couple of years ago, rampant spreading bamboo escaped from the flowerbed, pushed up paving slabs, broke through the base of the shed, and started to appear in the neighbour’s garden and the alleyway at the back.

Jackie called local landscape gardeners to take up the paving, dig out all the bamboo, relay the paving and build a new shed. While they were at it, she asked them to replace a few old fence panels.

“Fence panels are expensive and in short supply,” they told her. “All our UK timber has gone to China because of the development there.”
For a decade or so, China was buying raw materials from around the world. But the boom seems to have come to an end.

China now produces 45% of steel globally, and was importing so much coking coal and iron ore from Australia that prices tripled between 2002 and 2008, and accounted for nearly 30% of Australia’s exports.

But Chinese economic expansion started to slow in 2012 and prices fell from their all-time highs. By 2015, the iron ore price has fallen by two-thirds, and market prices of mining stocks have followed suit.

Iron Ore

Concerns over the Chinese economy meant the prices of gold, silver, copper and platinum hit meltdown in July 2015, wiping more than £6 billion of the value of London’s blue-chip miners.

Anglo-American announced they are cutting 6,000 head office jobs over the next two years, while Lonmin is closing two South African mineshafts.

It is commonly thought that commodities are a consistently reliable investment. Not any more.

At Tucana, we do not recommend investing in topical stories that can quickly fall out of favour. We don’t simply chase the next hot thing. Unless you are happy to ‘have a punt’, we keep your investments diversified and disciplined.

As a bonus tip, we do not recommend planting spreading bamboo in your garden, unless you surround the roots with a double layer of steel. Perhaps you can buy that from China.

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