Filed under: Forecasts, Products and services, Industry, Commodities, Oil, Agriculture, Recession
If you’re hearing whispers that the dollar might be creeping up in value and that this might put downward pressure on commodities, then let me tell you: Don’t you believe it. Even though some upward adjustment might occur for the dollar, it’s my view that this won’t, by itself, reduce commodity prices. To think so is just too limited an economic scope.
First, we can believe that the platform of oil prices is going to hold solid. I do think that the price of oil will eventually recede, but it’s not going to be soon and it’s not going to be much. It’ll be a couple years before we see any real decline, if we ever do. That reality gives us a good launching point for some speculation. Alternative fueling for motor cars will keep upward pressure on oils other than petroleum. Consider commodity soybeans, soybean oil, and palm oil as possible hedges. There’s also potential in propane, and to me, natural gas is still artificially under valued. You might not think there’s a relationship between these commodities and petroleum. Believe me though, there’s. Also, like the high volume traded commodities, other vegetable oils, such as sunflower oil and cottonseed oil, are worth looking into.
In metals, I believe that precious metals shall soon begin to decline. As a matter of fact, I think that gold is slated for a huge tumble, though I can’t say how soon. Silver should remain solid as use maintains it’s pressure on production capacity but with all others, I’d be careful. I would state that safe metal plays involve aluminum, aluminum alloys, tin and steel. The scrap metal markets are going nuts right now, but be wary of copper. To me, copper looks like it’s topped out.
All agricultural commodities should be strong and upwardly active for the long term. It’s a simple matter of global economics. As world wide demand is increasing, and domestic consumers can still purchase these categories at the current volume levels while paying the increased prices, market values of these commodities should continue their ascent.
I would advocate that for the second half of 2008, keep in consideration the following: Consider keeping the majority of your investments as close to the front of the supply chain as possible. Think about looking into coal. Maintain a comprehensive global view when looking for traction in specific categories.
Last, and perhaps most important of all, consider investment in potable water and water rights to be the failsafe investments of the century. Drinkable water is the last bastion of control. You or I will last a maximum of seven days without it. Water rights; “Gotta getcha some”
Gary Sattler is a freelance blogger with ZERO commodities trading experience. For a look at his prognostication performance based on previous blog posts, do a retrospective check here; ” My best stock ideas…” and “Investing in 2008″.
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