Related stocks: GG, SLW
QE2 has driven our gold and silver plays through the roof.
Since our respective purchases about three weeks ago, we've seen capital gains of 17% for Goldcorp (GG) and 37% Silver Wheaton (SLW).
Do these companies still have room to run? Or is it time to get out before the bubble bursts?
As of 11/9/10, gold is trading at $1,420 and silver is trading at $28
Tuesday, November 9, 2010
Monday, November 8, 2010
China and Oil
Related Stocks: ConocoPhillips (COP)
The price of oil reached a new two-year high Friday, November 5, closing at $86.85 a barrel, up 6.7% for the week. Today, it is up yet again, although only by a slight margin. Analyst predict the price of oil will not slow and will rise above $100 a barrel by next year.
Much of the increase in oil demand stems from China, the world's second largest economy behind the U.S. China has seemed to pull out of the global recession faster than many developed nations and is on track for another year of double digit growth. Much of the reason for the increase in oil demand stems for car sales. Between August and September, car sales rose 19%. China's oil reserves are unable to keep up and will be looking to buy more. Hopefully this demand will fuel an increase in the price of oil. Historically, the stock price of COP has correlated closely with the price of oil.
Source: Wall Street Journal
Friday, November 5, 2010
GG GOLD
Related stocks: GG
As of late, the U.S. dollar has been severely oversold due to the moribund economy. Instead, investors are looking to precious metals including gold.
Steve Halpern of TheStockAdvisors.com stated,
"If I were to buy a gold stock without regard to price, it would be Goldcorp (GG). Recently, it jumped sharply higher due to an excellent record cash flow, a four-fold increase in earnings, and a 100% dividend increase. "
However, he also predicts that the price of gold will retreat to about $1,150. We will see how this affects GG's performance.
Thursday, November 4, 2010
GG's bid for Andean
This morning, Goldcorp (GG) placed a bid to acquire Andean Resources (ASX:AND, TSX:AND) for $3.4B, which values AND's gold reserves at $1,619/oz.
Depending on how investors see this bullish price (are they grossly overpaying?), GG's price could suffer.
Gold's trading at ~$1,380
GG is up ~3.0% since the open
Source:
Seeking Alpha
Depending on how investors see this bullish price (are they grossly overpaying?), GG's price could suffer.
Gold's trading at ~$1,380
GG is up ~3.0% since the open
Source:
Seeking Alpha
Tuesday, November 2, 2010
Price of Oil
Related Stocks: COP
From bloggingstocks.com (http://www.bloggingstocks.com/2010/11/01/oil-rallies-to-83-and-most-investors-cringe/)
Investors whose stock and related plays hinge on the price of commodities would be wise to pay close attention to one, key commodity, oil, which popped up $1.52 Monday to $82.95 per barrel.
Investors should also note the primary factor analysts' cited in oil's rise: word of better-than-expected manufacturing sector growth in October in China.
Further, the above refrain is something U.S. investors should get used to: stronger growth in emerging markets abroad, higher commodity costs here.
True, while a myriad of domestic factors are capable of pushing oil and other key commodity prices higher, emerging markets, with their stronger-growth economies and expanding workforces, have the capacity to boost commodity consumption, and by extension, commodity prices, in a big way.
Market/Economic Analysis: Among other investments, rising oil prices benefit integrated oil companies, and the currencies of countries who are net oil exporters, including Canada, the United Kingdom, and Russia. However, rising oil prices hurt companies that use a lot of oil, including airlines and delivery companies, and hurt the currencies of countries who are net oil importers, the United States being a prime example. Rising oil prices also weigh on GDP growth in these countries and also increase the cost of tanker-transported goods. The price of oil has traded in $70-80 range for the last six months.
The bullish case for oil? Even though oil has had trouble closing above $85 recently, a stronger Chinese industrial sector combined with a second stage of quantitative easing by the U.S. Federal Reserve designed to boost U.S. GDP growth, would likely send oil higher.
The bearish case? If the global economy experiences a third-wave of the financial crisis in Europe, the U.S. or Asia, that would likely weigh on global GDP growth, and crude's price would decline.
Investors should also note the primary factor analysts' cited in oil's rise: word of better-than-expected manufacturing sector growth in October in China.
Further, the above refrain is something U.S. investors should get used to: stronger growth in emerging markets abroad, higher commodity costs here.
True, while a myriad of domestic factors are capable of pushing oil and other key commodity prices higher, emerging markets, with their stronger-growth economies and expanding workforces, have the capacity to boost commodity consumption, and by extension, commodity prices, in a big way.
Market/Economic Analysis: Among other investments, rising oil prices benefit integrated oil companies, and the currencies of countries who are net oil exporters, including Canada, the United Kingdom, and Russia. However, rising oil prices hurt companies that use a lot of oil, including airlines and delivery companies, and hurt the currencies of countries who are net oil importers, the United States being a prime example. Rising oil prices also weigh on GDP growth in these countries and also increase the cost of tanker-transported goods. The price of oil has traded in $70-80 range for the last six months.
The bullish case for oil? Even though oil has had trouble closing above $85 recently, a stronger Chinese industrial sector combined with a second stage of quantitative easing by the U.S. Federal Reserve designed to boost U.S. GDP growth, would likely send oil higher.
The bearish case? If the global economy experiences a third-wave of the financial crisis in Europe, the U.S. or Asia, that would likely weigh on global GDP growth, and crude's price would decline.
Thursday, October 28, 2010
Liquid Gold (Recommendation/Action)
Buy oil companies
ConocoPhillips (COP)
Rationale
1. General move into commodities as currencies are shaky
2. Hubbert's Peak Oil Theory- The rate at which our current technology allows us to extract oil from the ground is soon to be outpaced by our demand for it
3. Oil is priced in dollars, which means a falling dollar increases nominal dollars per barrel
2. Hubbert's Peak Oil Theory- The rate at which our current technology allows us to extract oil from the ground is soon to be outpaced by our demand for it
3. Oil is priced in dollars, which means a falling dollar increases nominal dollars per barrel
Source
Seeking Alpha--
Allocated 10 percent of portfolio to ConocoPhillips (COP)
Allocated 10 percent of portfolio to ConocoPhillips (COP)
Price
$60/share
Current Allocation
10% GG
10% SLW
20% AONE
20% COP
40% Cash
Current Allocation
10% GG
10% SLW
20% AONE
20% COP
40% Cash
Wednesday, October 27, 2010
CFTC and Silver
The CFTC, or the Commodity Futures Trading Commission regulator is putting pressure on the agency to take action of a two year investigation involving controlling silver prices.
According to the Wall Street Journal, "market players have made "repeated" and "fraudulent efforts to persuade and deviously control" silver prices."
Yesterday, silver traded up 28 cents, and today silver rose another 23.1 cents.
More from the WSJ, "Over the past two years, silver prices have bounced around, rising to around $20 just before the May 2008 CFTC report, then dropping through the rest of that year to around $9. In 2009, silver prices climbed back to just under $20.
This year, silver prices have soared 41.6% amid a lower US dollar and rising concerns over inflation.
Despite silver's lofty price, some analysts and other suspecting manipulation believe the metal should be trading at far higher level."
It is not clear what impact the CFTC will have on sliver prices, but as the Journal states above, some analyst expect the price of silver to rise further.
Hopefully, if this happens, it will increase the price of our SLW stock.
Subscribe to:
Posts (Atom)