Tuesday, October 2, 2012
Why Metals, Energy Look Attractive Going Forward
With the misguided commitment from major central banks around the world to "stimulating" the economies of the countries or regions they are based in, especially the euro zone, United States and Japan (China will probably stimulate soon), it predicates the probability that energy and base metal commodities, along with gold and silver, should push up in price over the next several years, with some possibly extending even longer, such as in the case of silver.
Even if there is a further global economic slowdown, the fallout from the stimulus efforts will start to point to resources and resource companies as one of the few viable places to place one's capital.
As measured by inflationary pressures, oil, gas and other commodities get more attractive as the U.S. dollar falls in value, as it will continue to do as money continues to be created out of thin air.
The caveat will be how much competing currencies fall in relationship to the U.S. dollar.
Successful commodity investors in the near future will be those who properly analyze the valuations of a particular commodity; getting in before it begins its upward run in price.
Some commodities at this time are overbought, while others are still available at a good price.
For example, natural gas appears to be at, or close to a bottom, so there is, for the most part over time, only one place to go, and that's up.
And even if there is still a little room to move down, the price of natural gas for long-term investors is very attractive, and those entering now should reap significant rewards over the next several years.
Oil on the other hand may be in for some rough times, as it may be on the opposite end of the spectrum, possibly ready to pull back significantly after years of high prices.
The geopolitical situation will weigh more on the prices than other factors, as many energy companies have improved operations to the point where there is a lot of oil available at lower costs than in the recent past.
So with the certainty the Europe and the United States will continue to inflate through fiat money, and Japan continuing on the course it set a couple of decades ago, there is little reason to believe a number of commodities won't continue to be among the best performers going forward, especially in precious and base
metals, as well as in some energy segments.