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 |  Subject: Via Ancaps: Smart Money Is Long Gold, Silver, Copper, Oil And Zero Coupon Treasuries  Fri Dec 24, 2010 3:16 am | |
| Smart Money is not taking their chips off the table on select commodities due to expectations the global economy continues to grow, and emerging market appetite for natural resources underpins continued optimism.
Smart Money expects the price of gold to move in fits and starts from its base just short of $1400 an ounce– and show a consensus gain of $150 to $200 more an ounce in 2011. Real long term bulls feel ultimately the $2000 an ounce level and even the $3000 an ounce goal is not impossible– but probable. While the hedge fund masters George Soros and John Paulson favor the enormously liquid ETF, GLD– others think GDX, or individual gold mining shares like ABX, Novagold and even smaller companies like Kinross (KGC) or MRS CN( a Colombian oil operation traded on the TSX) will have more leverage and appreciate at some multiple of the gold price. You might dollar average into USERX, a mutual fund that holds a diverse number of precious metals mining stocks.
After all, George Soros has not indicated that gold as “the ultimate bubble” is anywhere near bursting. Note each foreign central bank such as China, India and Russia just to name 3 of the BRIC aristos, who continue to amass gold as a currency reserve instead of the dollar or the euro. Streettalk apologizes for missing the run-up in the Swiss franc as a safe haven from the sovereign debt crisis in euroland.
But, don’t expect gold to spike 40% as it did in 2010 from $1000 an ounce to $1400 an ounce, almost without any hesitation. And you must watch out for signs of danger like the possibility of the Federal Reserve raising interest rates even a fraction. Smart Money doesn’t expect that to happen for at least two years.
Silver and copper are smaller markets, but their adherents argue that the industrial demands for the shiny stuff by nations that must build out their infrastructure products such as the fast speed transportation system in China or the ports of India, Thailand another emerging markets clearly suggest a shortage of silver and copper, possibly iron ore as well. Beware that speculation in both commodities will create volatility that investors will have to wait out for gains expected to be 25% in copper and possibly 30% in silver once there is a clear breakout above $30 an ounce.
Freeport McMoran is a cooper and gold producer with vast deposits in Indonesia, which will benefit from increased commodity prices. SLV, a silver ETF and Silver Wheaton, SLW, which buys the silver revenue from other mines, and sells it on the open market, are the establishment ways to play silver.
Crude oil looks to be a more conservative play for 2011, and will trade in line with the monthly economic statistics unless political events cause a sudden volatility on the upside. Why not emulate the great Soros, who does not own the majors like Exxon or even Occidental– but is participating in secondary oils like Interoil(IOC), Plains Exploration(PXP) and Weatherford International (WFT) on the basis of the demand for the equipment to explore and produce more crude oil for Chinese automobiles. There are energy ETFS as well if you feel like being diversified like the Vanguard Energy ETF.
ANCAPS: ANARCHO-CAPITALISTS |
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