The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which comes with counterparty risk. This conclusion is apparent from the fact that the futures prices for gold and silver have moved into “backwardation.”
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Read more: Investors to Silver: "Let's Get Physical" http://dailyreckoning.com/investors-to-silver-lets-get-physical/#ixzz17euFwtZJ
If you’re interested in making money in energy commodities over the coming decade, I have two important numbers for you…
The first is the price of natural gas in the US – which is less than $4.50 per million British thermal units (mBtu). The second is the price of natural gas in Asia, where people will pay $10 per mBtu for natural gas they import from overseas.
Read more: America's Next Great Commodity Boom http://dailyreckoning.com/americas-next-great-commodity-boom/#ixzz17es28100
The nearby chart tells the tale. Commodities, as an asset class, have become quasi-currencies.
“Reports Barron’s: ‘This year, for the first time ever, China has been investing more overseas in assets like iron, oil and copper than it puts into US government bonds.
Natural resources should still be a good sandbox to play in to make a lot of money and protect your wealth against inflation.”
Read more: Why Commodities are Rallying as Currencies Decline http://dailyreckoning.com/why-commodities-are-rallying-as-currencies-decline/#ixzz15wqUfeIS
Interesting reports about volatility and seasonality
While short-term factors like the U.S. dollar’s volatility and the Federal Reserve’s QE2 program seem to grab the most attention, I believe the doubling of the world’s population, massive infrastructure expansion like China’s subways and the “free market policies” being embraced by the government leaders in the emerging world are much more significant
Read more: Anticipating Volatility and the Rise of Emerging Markets http://dailyreckoning.com/anticipating-volatility-and-the-rise-of-emerging-markets/#ixzz15uUjWASE
Investments in China and Brazil are a bit overdone at the moment. Where can an international investor seek higher rates of return? Try the Chilean peso.
1. Chile’s economy is absolutely booming. It is expected to grow by 5.1% this year and rise to 6.1% next year (extensive copper export)
2. Accelerations by a healthy employment rate
3. The phenomenal increases in employment are helping increase the country’s corporate investment and spending. But more importantly, the gains in the labor force are helping to support income growth and personal spending. Chilean domestic consumption skyrocketed in the first three months of the year — vaulting higher by over 11%.
As the Chilean economy expands, higher consumer prices are inevitable — but so are higher central bank rates
Read more: Three Reasons to Consider the Chilean Peso http://dailyreckoning.com/three-reasons-to-consider-the-chilean-peso/#ixzz15uMDv1i3
Read more: Three Reasons to Consider the Chilean Peso http://dailyreckoning.com/three-reasons-to-consider-the-chilean-peso/#ixzz15uHpuK9x
The dollar may fall below 75 yen next year as it becomes the world’s “weakest currency” due to the Federal Reserve’s monetary-easing program, according to JPMorgan & Chase Co.
With monetary easing in the U.S., Japan and Europe likely to bolster the global recovery and increase demand for yield, the yen is poised to weaken against other currencies beside the dollar to levels last seen in early 2007
Royal Dutch Shell said that by 2012 it expects more than half of its output will be natural gas - not oil. That is as if Starbucks said it expects to sell more tea than coffee. Yet this prediction is not unusual for Big Oil these days. In fact, most of the big boys are making big bets on natural gas. One of my favorite plays in the natural gas sector remains Contango Oil & Gas (AMEX:MCF). This is because it is a low-cost producer with no debt, so it can still create shareholder value in a low-price environment. Contango's all-in costs are under $2 for nat gas.
http://dailyreckoning.com/big-oil-bets-on-natural-gas/
The long and short of it is that the world is going to move toward nuclear power. That's why I have recommended investments in long-term uranium players like Cameco (CCJ: NYSE), and Denison Mines (DNN: AMEX), as well as direct investments in uranium via Uranium Participation Corp. (U: TSX).
Solar and wind have a place in many niche energy applications, but not for meeting the looming energy demands of billions of people. For the next 30 or 40 years, the alternative energy methods will move toward the 5–7% range of overall world energy supply. But for the “big power,” you need to keep focused on nuclear energy.
http://dailyreckoning.com/more-nukes/
The best and easiest way to cash in on Brazil's housing boom (other than to buy a property directly) is to buy Gafisa, which trades on the NYSE under the ticker GFA. It is the only Brazilian real estate company trading on the NYSE.
http://www.dailyreckoning.com.au/brazilian-real-estate-is-a-buy/2010/10/22/
There is lots of ugly economic news out there, but one key bright spot is world trade. In the US, one particular industry will enjoy windfall profits from exports this year. That industry is agriculture.
As a long-term investment, Lindsay (NYSE:LNN) should benefit as farmers spend some of that money on irrigation equipment
In Canada, Viterra (TSX:VT) is a good long-term holding. It should rebound after excessive rains in Western Canada hurt grain production. In China, Migao (TSX:MGO), makes fertilizers for high-end crops such as fruits, vegetables and tobacco. It’s growing capacity, and as the financials reflect the additions, it should report good earnings.
Read more: The Best Way to Bet on America http://dailyreckoning.com/the-best-way-to-bet-on-america/#ixzz0ybEl811h
Many of the most compelling investment ideas featured investments in oil, emerging markets, agriculture and water.
Gulfport Energy (NASDAQ:GPOR) – An oil and gas company based in Louisiana
Loews Corp. (NYSE:L) – A conglomerate with interests in three publicly traded companies: Diamond Offshore, Boardwalk Pipeline and CNA Financial
FEMSA (NYSE:FMX) – A Mexican blue chip with interests in two publicly traded companies: Coca-Cola FEMSA and Heineken
Foster Wheeler (NASDAQ:FWLT) – A large engineering and construction firm
See: Stock Picks From the Vancouver Conference
Longer term, there will be pressure to produce more food. In turn, farmers will seek to boost crop yields. Fertilizers are one way to get there. There is plenty of room for growth here, as application rates remain well below recommended rates.
Of all the nutrients, potash has the greatest potential for growth. (...) Either way, both of these stocks are potential monsters. Potash and Mosaic could double their output by 2015 and 2020, respectively. About 75% of new supply coming online till 2020 is from these two titans. This provides a powerful way to increase earnings even if potash prices go nowhere. If prices do climb, then earnings will jump sharply.
(http://dailyreckoning.com/potashcorp-nysepot-and-mosaic-nysemos-investing-in-the-fertilizer-crisis/)
As far as I know, China will still need coal. China consumed 47% of the world’s coal last year. The growth of that demand has been mind-boggling – so much so it is hard to wrap one’s mind around it. In 2000, China consumed as much coal as the US. Today, it consumes three times as much as the US. China’s leading coal stocks are all down 25% or more of late. This includes China Shenhua Energy, China’s largest coal producer, and China Coal Energy. It might be a good time to fade the Aussies and go long the Mongolians.
http://dailyreckoning.com/buy-what-china-needs-coal/
Central banks are blowing another asset bubble. Both the technology and real estate bubbles were spawned by cheap credit.
Put simply, when you factor future earnings growth and an expansion in valuations, the developing markets are prime candidates for the next asset bubble.
In our opinion, the next bear-market will only occur when the Federal Reserve is done raising its benchmark rate for this cycle. So, in the next bear-market, instead of financial institutions going bust, entire nations are likely to default.
If our assessment is correct, towards the end of this bull-market, we are likely to see the following red flags:
However, this bull-market should continue for the next 2-3 years and as long as the primary trend is up, we will remain fully invested in our preferred growth-producing assets. (http://dailyreckoning.com/blowing-bubbles-2/)
Among the others comments this is important to remember: “China won’t revalue the yuan at this time because as the dollar is rising, so, too, is the yuan. This hurts Chinese exports to Europe – its largest market. Ergo, there is no way China would allow further strengthening of the yuan to the euro by strengthening the yuan relative to the dollar!!! (If you don’t understand this one, please re-read until you do. It is the single most important dynamic right now in the global recovery besides the euro collapse itself.)” (http://www.peternavarro.com/dailyblog.html, Saturday, May 15, 2010)
MGI says the Indian economy is expected to be five times greater by 2030, with urban centers being the key driver of this growth. It projects India’s labor force to increase by 270 million—70 percent of that coming from urban jobs. This mass of people will likely demand better housing, better roads, better goods— in all, a higher quality of life than what’s been available to them in the past. The resulting pressure this could have on commodity demand is the X-factor that we believe makes this cycle different than anything we’ve experienced in the past. You can download the full report at McKinsey’s Web site.
(http://dailyreckoning.com/india%e2%80%99s-urban-future/)
I don’t think I’d want to be involved in the frothy property market of the big cities. I wouldn’t want to invest in its opaque and undercapitalized banks. On the other hand, I would invest in ideas that link to the agricultural scene. There is clear demand and growth and constraints – in water and arable land – that one can deal with in only so many ways. I would invest in uranium, which ties back, in part, to China’s aggressive nuclear build-out. Robeco is forecasting a second-half rebound. JPMorgan Chase expects Chinese stocks to rally more than 40% this year.
(http://dailyreckoning.com/china-boom-or-bust-does-it-even-matter/)
Two fund recommendations to take advantage of the world’s most-hated asset class.
First is the iShares MSCI Japan Index Fund (NYSE:EWJ). It mirrors the performance of the MSCI Japan Index, a very broad swath of Japan’s largest companies. And it gives you a good shot at outperforming the benchmark Nikkei 225 Index. On both a one-year and a five-year basis, EWJ has beaten the Nikkei.
But don’t limit yourself to the blue chips. In almost every market turnaround, small-cap companies lead the way. So pick up the Fidelity Japan Smaller Companies Fund (FJSCX) as a supplement. This fund outperformed the MSCI Japan Index during the post-rebound in 2009. And it might do so again when Japan really starts to rebuild. Plus, you’ll gain exposure to many companies in this fund that you won’t find in EWJ.
Remember, this is the Trade of the Decade. Not the Trade of the Week (http://dailyreckoning.com/buy-japan/)
