This is a good little read from the Daily ReckoningThe...

This is a good little read from the Daily Reckoning

The fundamental driver behind resource prices is the inability of supply to catch up with demand.

It means that companies with proven reserves in the ground - or even just a large, undefined resource - may be better long-term investments than existing producers. Why?

--Existing producers are vulnerable to falling commodity prices. They are vulnerable to rising capital and labour costs. They're also vulnerable to lower global economic growth. That's a long list of vulnerabilities.

--If we're in a Credit Depression in which financial asset prices are going to fall or go sideways in real terms for many years, you're better off accumulating real assets that are still in the ground. These are like savings bonds, but denominated in metal, ore, or tangible assets.

--One way to think of this strategy is like buying a call option on future economic recovery. The option gets cheaper the further asset prices fall. And unlike a real option, there's no time decay. You just have to make sure the company that owns the rights to the mineral or energy resources is a going concern and can stay that way through a long drought.

Which is basically where PDY is, and coming off its current SP represents very good value.