Commodities In Characteristic
Selloff
Once again at the end of 2011 we
heard the voices of negation sounding the fear of the bursting of the
commodities bubble. The naysayers come out with their Cassandra calls
whenever commodities go into a characteristic and salubrious selloff. They
never really learn to respect the importance of gold (GLD) and silver's (SLV)
role in the long range secular multiyear ongoing rise.
We emphasized the importance of
avoiding knee jerk reactions when precious metals experience healthy
pullbacks. The first week of January 2012 saw commodities (DBC) rising across
the board as they return from the premature grave to which the naysayers have
assigned them.
One wonders how the short sellers are
enjoying this periodic resurrection in vital metals such as gold(GLD), silver(SLV), rare earths (REMX) and uraniums(URA).
 
Transparent Horizon Of Record Low Interest Rates
Attendant to a new rise in these
vital commodities, the economic base should be prepared to receive them. On
January 24th-25th the Federal Open Market Committee will be meeting once
again in Washington. One of the areas on which they will be focusing is the
travails of the U.S. Housing Market and new methods to bring down the high
unemployment rate. The Fed is promising a transparent horizon of record low
interest rates to provoke the banks to lend money.
It is important that the Eurozone
malaise undergo corrective measures in order to restore Europe to health.
Recently Christine Lagarde, Head of the International
Monetary Fund, has expressed broad generalities toward the need of fiscal
reforms. It is hoped that Lagarde will not be a
laggard in the birth of the "EuroTarp" by
whatever stimuli to be applied.
Euro Hitting New Lows
The weak Euro is attracting foreign
capital to purchase cheap European natural resource assets. Our research team
is looking for undervalued gold assets in the Eurozone as these countries are
looking to rapidly develop mines to provide high paying jobs and growth. The
Euro has broken the 2011 lows as Merkel and Sarkozy meet to rescue the
moribund Eurozone economy.
It is important that a coherent plan
of attack be formulated rather than the indiscriminate printing of Euros(FXE), which we are currently witnessing. The Euro is
rapidly losing value. This procedure of currency devaluations is
counter-productive unless corrective measures are instituted such as serious
spending restraints, permanent tax rate cuts and regulatory relief. In plain
language, the Europeans and the Americans can't print more dollars (UUP)
without building on a base of budgetary restraint.
Recovery In Rare Earths, Uranium and Precious Metals
How does this affect our selected
precious metals stocks(GDX), rare earths (REMX) and uraniums(URA)? This week the rare earths are emerging
from their second half 2011 slumber. It is felt that they will lead the
upcoming recovery. This week certain of the rare earths are producing
impressive percentage gains as an augury of things to come.
China is playing a dual role not only
for their own domestic needs but in establishing a
quota system for exports to other nations. This emphasizes the importance for
the West and Japan to establish an independent role in their
own destiny. No matter what happens in the pending appeal with China
at the World Trade Organization, The West has learned a valuable lesson in
geopolitics as the external industrial nations recognize the importance of
rare earth independence.
The uranium sector is enjoying a
profitable week as well. No other area has had to come up from taking a count
so many times. The press has obscured, misrepresented and sensationalized the
true story about the role of nuclear energy(NLR) in
a modern, industrial world. The media has relegated uranium mining to the
status of selling newspapers and TV commercials. The truth be
damned. Imagine when the true story is finally told. Not once have the
talking heads mentioned that reactors that are being built are portable,
economical and safe. The truth can not be
suppressed forever.
Swiss Franc Scandal Highlights Investing In Tangible Assets
Important news is just coming over
the wire. The Swiss National Bank Chief has resigned in shame after it is
revealed his wife was selling Francs (FXF) to buy U.S. Dollars (UUP) long
before the central bank sold Francs to slash the value. The Swiss franc is
rising against the dollar. One wonders how many others were involved in that
trade to push the weak dollar higher?
In conclusion, our sectors and
recommendations are once again emerging from their long bases. Reiterating
the long ascendance of these sectors especially in light of all the bullish
forces, patience is paramount albeit painful. We have been advising our
readers that this correction in commodities would be far from terminal and
that it represents a classic buying opportunity.
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