IT'S the first trading day of March and everything looks bleak.

World stock markets continue to fall after digesting the UBS forecast that the sub-prime crisis would cost more than $US600 billion ($646 billion) in red ink.

New York economics guru Nouriel Roubin questions the UBS figure. Make that more than $US1 trillion for sub-prime losses, he says.

HSBC reports $US17.2 billion in bad loans. Out of Tokyo comes news that Takefuji Corp, Japan's third-largest consumer credit company, may lose 30 billion yen ($310 million) on derivatives transactions.

And in London, highly respected economics writer Ambrose Evans-Pritchard warns in The Daily Telegraph that investors should stand

by for the next wave of property collapses: British, European and Australasian.

"For the first time since this Greek tragedy began, I am now really frightened," Evans-Pritchard concluded.

Meanwhile, back at the London Metal Exchange, it was if there was an alternative financial universe. Nickel rose 5.4 per cent on that first trading day to get well and truly back over the $US33,000/tonne mark.

Tin prices -- which were already in record territory -- went to $US19,000/tonne in intra-day trade.

And then there was copper. It had been described as the metal most vulnerable to the collapse of the US property market and the construction sector.

Yet, on the day in question, the red metal comes within $US25 of its all-time record -- last May's $US8600/tonne.

But this bullish day for base metals was not a technical rebound after some serious declines. On the contrary: the previous Wednesday had seen nickel rise by 4.5 per cent and zinc by 7.5 per cent.

Gold, of course, was the big news of the first trading day of March, with one intraday trade for an April delivery contract being done at $US992 an ounce. Silver was firmly through the $US20/oz mark.

The triumphal march of gold and silver was, of course, a consequence of the parlous financial news -- the safe haven effect. The latest boost to the base metals was despite that news.

The falling value of the US dollar played its part in both sides but, by itself, did not account for the strength of the industrial metals.

Here's the bottom line. We are in danger of, if not running out of metals, at least never again having enough to meet the world's needs.

Indium, for example, is vital to the manufacture of solar cells, liquid crystal displays and other electronics. Yet there are predictions out of Germany that, within 10 years, we may have used up all the known deposits in the world.

That is the most critical situation, but supply of many metals is under some degree of stress.

In the last week of February, for example, bismuth prices shot up 25 per cent because Chinese medical companies could not acquire all they needed.

Professor Ross Garnaut has been in the news recently for his views on climate change, but in August he completed a commodities report for Rio Tinto, the conclusions of which were just as portentous.

He and colleague Song Ligang reasoned that, within 20 years, China was likely to be consuming more metals and energy than do all the industrialised countries today. They expected China's economic output to increase by a factor of eight over the coming two decades.

This neatly coincided with a report in the magazine New Scientist that quoted the 10-year exhaustion horizon for indium, but its findings were that the German scenario was far too optimistic and that indium supplies could be critical within five years.

And then the magazine added a few other nightmare scenarios.

If each of the 500 million vehicles on the world's roads in 2007 were re-equipped with catalytic converters, the world's known platinum would be exhausted within 15 years. That re-equipping won't happen, but gradually all new vehicles will be fitted with the pollution-fighting device.

The magazine applied the rule of thumb that, as we progress over the next 20 years, we would be moving towards a situation where every person on the planet would be consuming on a per capita basis half the amount of metals that Americans were using in 2007.

Nightmarish would be the only way to describe the effect, if New Scientist were right. Supplies of silver could dry up within 10 years, there would be no more antimony after 15 years. Lead would be almost impossible to buy within eight years, tantalum within 20 years and zinc 34 years.

More recently, New Scientist has added the Peak Coal concept to the industry by mounting a case that the black mineral is starting on the same decline path as oil has apparently been on.

What does all this mean to the Australian investor? Not as much as it should.

For a start, the great bulk of the hundreds of resources companies are nowhere near actually producing anything, let alone paying dividends. Many could be five or more years away from any production; some will never produce. In the case of the latter group, the only winners will have been the directors.

And given that we are five years into a commodities boom, the return to shareholders has been disappointing. Just 43 companies listed on the ASX mining and oil board have paid dividends in the past year.

Strip out the established players -- Rio, BHP Billiton, Zinifex, Santos, Woodside Petroleum, Energy Resources of Australia, Coal & Allied and Alumina -- and the list looks even more threadbare.

Investors were happy to put up with the situation because there were the capital gains as share prices soared.

But those days look to be over.

The merger of Zinifex and Oxiana, along with Zinifex's takeover of Allegiance, is a start on the road to greater critical mass in the sector forging corporate structures that can guarantee real and lasting returns for shareholders.

Outside the large producers, the best investment targets would appear to be those companies either coming into production now or within the next year. In this climate, forget the rest -- and ignore the hype, of which there will always be plenty.

The writer owns shares in Rio Tinto. – The Australian