Don't be fooled at all by the slight correction in commodities, as going forward, no matter what happens to the global economy, commodities will be a solid place to put investment capital, as emerging markets should start buying again sometime soon, and even if they don't, many investors will flock to certain commodities as a safe haven; such as gold and silver.
Other areas to look at would be agricultural commodities, along with some of the foreign currencies poised to move on the ongoing weakening of the U.S. dollar. And even if there is a upward movement of the U.S. dollar, which could happen in the short term, overall we'll see the continuing collapse in value of the greenback, ensuring a number of commodities will be important hedges against that behavior.
Another thing to consider is in grains, there have been an enormous amount of production and supply, and so demand hasn't kept up with it, keeping prices down. Energy has been the same, as people have cut back on driving and monitored their home heating to keep things in line with their incomes.
If inflation surges in 2010, a real strong possibility, from the ongoing debasement of currencies around the world from central banks printing extraordinary amounts of money and throwing it into the market, you'll see commodity prices rise along with it, participating in the inevitable increase in prices of raw materials.
Commodity investing legend Jim Rogers recommends looking for commodities with depressed prices at this time, and staying away from purchasing gold until it drops in price; although Rogers is a long-term bull on the price of gold. Other areas he's recommending to buy commodities is silver, palladium, natural gas and agriculture, all of which have had downward price pressures on them.
Where commodities will really take of is when a real recovery emerges, and large middle classes in China and India generate huge demand for raw materials and products; especially the more predictable emerging middle class in China.
No comments:
Post a Comment