Precious metals and mining shares are still attractive investments, but are going up.
There are a lot of attractive momentum trades in mining shares right now. With spot prices strong and the broader stock market continuing to tick higher, speculators are making moves all over the place. Investors are buying stocks once again and with some fervor. It will be very interesting to see if the January effect takes place this year.
Getting back to the trading action. I’m seeing a lot of fully priced precious metal shares moving up across the board. Even coal miners are doing great in this market. I think this positive trading action is going to stay with us for a while, but readers will remember my previous view that I’d love to see a major correction in this sector so as to create a more attractive entry point. But, the action is the action and, like I’ve been writing for the past several months, it’s an opportune time even to own the market.
Just like during the Internet craze, when the broader stock market was strong, a ton of new issues hit the market. This is happening now, especially with junior miners. Larger producers are also able to raise equity capital without any problems. This is why it’s such a good time to be in the mining business. The money is really flowing.
There is a lot of “group think” in financial markets and institutional money has a real tendency to follow the herd. If that fund is buying, why shouldn’t ours? This is happening now in commodities, as more and more institutional investors increase their exposure to this sector.
The commodity price cycle is now something that we can all feel—in the prices of bread, gasoline and even jewelry. Corn futures just hit a 30-month high. That’s based on fundamentals, but also the herd of speculators. Accordingly, I think the commodity price cycle bandwagon has a lot further to go, especially as domestic incomes improve. People love to spend money if they have it and, with an improving global economy, the fundamentals for gold, silver and agricultural commodities continue to be strong.
Iconic Chart Shows Biggest Devaluation of Our Generation
Yesterday, China’s central bank said its foreign-exchange reserves have hit $3.0 trillion for the first time in its history. China is awash in dollars. The U.S. itself has too many dollars floating in its financial system. Is it any wonder the U.S. dollar is collapsing in value against a basket of currencies made up of other major currencies?
Taking Stock: A Lot of Good News Already Priced Into Stocks
Most capital markets are due for a correction and that makes it more difficult to be a new buyer of stocks, bonds or commodities right now. All you have to do in the equity market is pull up a one-year stock chart on the S&P 500 Index and you’ll see the tremendous capital gain. The market has already priced in strong first-quarter earnings and, if companies don’t announce strong second-quarter visibility, share prices will retreat. So, what's next for investors?
A Safer Way to Invest in China: The Large-cap Chinese ETF
Playing the Chinese capital markets involves excessive political and economic risk. While the risk is high in trading Chinese stocks, especially of the small-cap variety and for smaller trading accounts given the current selling of Chinese reverse merger stocks, there's another, lower risk way you could play China.
