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Shine On Gold, Shine On
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Inflation is fast becomming a runaway train and it will be hard to stop. Today oil closed at over one hundred dollars a barrel. Oil, gold, platnium, copper, and grains are making new highs. And we're worried about a possible slowdown or a recession? Does anyone think that a recession will improve the inflationary outlook? Will all of those global commodities just drop because the USA has a consumer slowdown? Folks, get real. We're in for more inflation spirals because the FOMC will probably cut rates at least one more percent before this summer. That will cause the dollar to drop, and gold and other commodities to rise even more. There's lots of ways to play this out. Load up on the gold mining stocks: Newmont, Barrick, Goldcorp, Kinross, and Yamana. There are others so do some research, but don't go too small. There may be some takeover possibilities in the smaller mines, but tread carefully and do your homework. Some mines hedge gold and some do not. The mines that hedge agree in advance to sell at a fixed price sometimes a year or more out. The mines that do not hedge go with the current prices. These mines have the most upside when gold is rising like it is now. It costs between 350 and 400 dollars to mine an ounce of gold according to the annual reports I have been reading. When gold sells at nine hundred an ounce, the potential for profit looks pretty darn good. You can also own the metal now through the ETF. Personally I believe the mining stocks have the best upside, but either way gold is a winner. If you want to do a little more research on the gold subject, google the US Gold website and start reading. The charts and the other details are quite informative and give a thorough explanation of gold's relationship to the stock market. US Gold is a small company, but the CEO is the former CEO of Goldcorp and brings years of knowledge and experience to the table. The web site is informative and offers lots of information to those seeking to learn about gold in general. | ||
The Trend is Your Friend
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Today's trend seems to be a pickup in inflation. A quick way to make a few dollars is to invest in commodity related stocks in energy, materials, precious metals and agriculture. As the dollar drops and inflation increases these investments rise. This strategy will work wonderfully until the Fed begins raising rates. Since that won't be for awhile, lets look at some possible movers in the commodity related areas. Afraid to go all out on one stock and want some exposure to the area? Then try RJA and GSG. RJA is Rogers Elements, an agricultural index started by Jimmy Rogers, the investment biker, no less. He's sitting over in China in the land of opportunity now and is a huge bull on agriculture. The index features about 20 various ag commodities from wheat and corn at a high per cent of the index down to greasy beans at the lower per cent end. It's new and up over 10% since I bought and unfortunately not available in SLO. (It must be too thinly traded) I mention it in hopes it can eventually be traded here as it is a sure winner. GSG is easily available and it is the symbol for the S&P commodities index. You get exposure to a broad area that should trend upward for some time. Gold is best played by owning the mining companies now rather than the metal itself. The metal has seen a considerable runup and will go higher. How high? Who knows? This I do know: the mining companies are just beginning to see their profits accelerate and they have miles to go. The major players are Newmont, Barrick, Goldcorp, Kinross and Yamana. There are others and the gold industry is ripe for consolidation. Too nervous to pick one? Try a fund or purchase the options when they become available in the not too distant future. The energy world is confusing. There's oil, natural gas, drillers, refiners, etc. Which one gives you the most bang for the buck? All that is driven by demand and depends on weather, time of year, world tensions, etc. It's a tough call to decide what's going to happen. One thing I do know. S. America is have some natural gas problems and Cuba may also open up some in the future. PZE (Petrobras) is inexpensive, pays a nice dividend and is a safe way to play this. The African continent is an increasing player on the oil stage. SSL (Sassol) is a large cap global company that has a patented process of making oil from coal. It is a huge industry in S. Africa and is sharing its technology worldwide for a price. Barrons wrote a piece on it not long ago and gave it high marks. Want some good old American company? Take a look at CHK (Cheasapeke) They are sitting on the Barnett Shale project in Ft Worth Texas and a boatload of natural gas. They also own several of their rigs and property in the Applachians. Natural gas is plentiful, clean burning, and is produced in our own country. . | ||
