Archive for the 'Natural Gas' Category

Best Of March On Krugergold

Twelve Choruses
Inflation
Spread Betting
Positioning For Opportunities
Investment Themes part 1
Investment Themes part 2

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Investment Themes for 2007/08 – 1. Commodities

Metals
It is quite possible that base metals may be in for a rough time as the slowing American economy and rapidly bursting housing bubble have global effects, resulting in reduced demand. Precious metals however, seem set for a rise in value. Propelled by the fear and uncertainty currently beginning to effect the global markets, the traditional store of wealth could shake off its archaic image. New methods of investing in these metals such as ETF’s and off-site storage (e.g. goldmoney) allow an entirely new class of investors access to these commodities. I don’t think we’re far away from pundits advising SIPP pension holders and stock ISA holders to invest a portion of their holdings in this sector, a trend which would be hugely bullish for the metals. Although temporary setbacks are to be expected, especially if the Yen carry trade unwinding continues, precious metals are expected to continue their multi year bull run. Although the “inflation adjusted” prices of the last gold peak in 1980 point towards prices in the thousands of dollars range, I’d expect gold to continue it’s recent steady rises in the coming year with a target on the $850 highs seen in 1980.

Natural Gas
Natural Gas Chart (GrowthStockWire)
Natural Gas has just broken out of a long term consolidation pattern, and I suspect has been under-appreciated due to a warmer than normal winter in the US. As gas runs out in the North Sea, the UK will have to import increasing amounts of this fuel from the continent. This has (and will) cause headaches, starting with the pipe from the continent with problem’s further out with supply from Russia. These factors point to a good technical and fundamental picture for the coming months in the Natural Gas market.

Oil
Peak Oil is pretty much a certainty – albeit timing is debatable. Allied to tensions in the middle east, falling production in established fields, decreased exploration of new fields, the price of oil is probably quite cheap at $60, and a a bargain at anything below. Of all commodities, this is most likely to benefit directly from geopolitical events in the Middle East. DecliningOil(kitco)
As Iran seizes British personnel, Russia withdraws it’s personnel, and Israel recommends that all Iranian Jews should leave Iran, prospects for the region look bleak. As a country that has the third largest reserves of oil is on the brink of military action, any change in the situation is likely to quickly effect the price of oil, and quickly reverberate through other defensive commodities. While commodities will be winners in the event of any escalation, I fear that the world as a whole will be the loser. Tensions throughout the region are likely to be inflamed resulting in uprisings in Iraq and Afghanistan, increased unrest in Palestine, Lebanon, Southeastern Turkey, and possibly even west leaning countries such as Pakistan. Make no bones about it – this situation has globally reaching ramifications, although I wouldn’t like to see the above borne out, it pays to prepare.


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