We have been bullish on gold, oil, base metals, India, China and transportation of energy and minerals for a very long time and that bullishness continues. In a recent email, I stated that we had become more cautious short term about the demand for base metals although continued to be long-term bullish. Our logic was that a U.S. economic slowdown in demand would impact the prices of base metals…and even though it takes many years to bring on new mines, a slowdown in U.S. demand would impact global prices.
Now after a few days of deep research and conversations with a number of economists, we have modified our position. It seems that the ship borne deliveries of many base metals and minerals are almost entirely imported by the fast growing countries like China; ship borne imports of many metals into the U.S. is not a large part of the global market. With the exception of copper and one or two others, most metals are not imported into the U.S. by ship in nearly as large quantities as they are imported into China and similar countries.
Because we continue to believe that a recession in the U.S. would not lead to anything more than a growth slowdown in the developing countries, we are once again short-term bullish on base metals such as iron ore, nickel, cobalt and others where the U.S. is not a huge importer. We will buy the companies that mine these metals on dips.
Also, for those of you who think more long-term take a look at uranium, which has suffered a big price decline. Perhaps not immediately….but over time, uranium prices will once again rise, as demand from nuclear utilities will be growing, due to the fact that more and more nuclear power plants are going to be built worldwide.
These articles are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security. Guild Investment Management does not represent that the securities, products, or services discussed in this web site are suitable or appropriate for all investors. Any market analysis constitutes an opinion that may not be correct. Readers must make their own independent investment decisions.
The information in this article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Guild Investment Management to any registration requirement within such jurisdiction or country.
Any opinions expressed herein, are subject to change without notice. In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control. We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate. In addition, we may have conflicts of interest with respect to any investments mentioned. Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned.
Guild’s current and past market commentaries are protected by copyright. Apart from any use permitted under the Copyright Act, you must not copy, frame, modify, transmit or distribute the market commentaries, without seeking the prior consent of Guild.