Comments on: The Commodities Bull Continues its Charge

By: Gustaf Rounick

Gustaf Rounick — Fri, 07 Mar 2008 22:57:03 +0000

I agree that gold will do well in this environment. It will get at least close to its inflation adjusted price record which would be more than double where it is now. However, I think there is too much focus on it now (compared to some of the other commodities) and its practical uses are limited, especially as the price increases. Another reason why I like agriculture is because its perishable. That said, gold has always had a mystical value and will continue to have one but is more subject to our emotions.

By: Ken

Ken — Thu, 06 Mar 2008 19:45:55 +0000

My focus is on safety and preservation of purchasing power…not only ROI. gold is a proven store of value and a safe haven in times of political uncertainty and market volitility. Gold price is not correlated to stocks and bonds so it can provide valuable diversification with high liquidity. Gold is historically strong when dollar is weak. US fiscal and monetary policy - combined with existing trade and budget deficit, demographics, etc. virtually guarantee continued dollar weakness over time. China, Russia, Saudi Arabia, Japan and other central banks will predictably sell dollar reserves and buy gold. This could turn the dollar slide into a dollar rout and price of gold will accelerate to upside. I am bullish on base metals, agriculture, oil and metals with industrial applications (esp. silver and moly) as well, but they are more sensitive to any economic slowdown and any operational issues with mining and processing. In the end, these are all inflation plays and “anti-dollar” plays and the chances are strong that they are very good investment opportunities for 2008.

By: Mats

Mats — Wed, 05 Mar 2008 19:17:51 +0000

Why, gold. Because it has always been that way when times get rough? What can you produce using gold? Why not a metal that can be useful? If the world is going down are we all going to buy gold? and produce what? I say silver,copper etc. Mats

By: Ken Kaplan

Ken Kaplan — Wed, 05 Mar 2008 19:15:28 +0000

Both the fed and government policies are creating an unprecedented wave of economic stimulation in the US. This may well succeed at blunting the impact of the recession as money flows into markets - but inflationary pressures in energy - agriculture and commodities are bound to erupt. The dollar will continue its decline and as China and oil exporters diversify away from dollar holdings the floor could really drop out. The export sector will be the silver lining for the economy in 2008. Your stagflation call is going to be correct. With housing markets in decline, high levels of credit card debt and no savings, the US consumer is tapped out. Discretinary spending is bound to decline but world wide demand for commodities will remain relatively strong. In this environment gold is the safest investment to own and should be over-weighted. At nearly $1000 a 10% pullback is likely but I will be a buyer on any dip.