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Do you think sudden surge in few commodities will last?
Is it time to buy or is it time to sell.
Pl give valid reasons. Thanks
Answers
2775 points
Oldman answered one year ago …
The surge had two reasons, expiration of Oil futures on the weekend, but October's and November's are much lower, so in the short run, Oil's going down a bit (ca.105). With regard to the commodities as a group, by the end of June, all the speculation had driven them up, and the credit crisis of July-Aug. had major funds scrambling for cash to meet redemption requests...and USTreas. even at zero yield, looked "safe"
However, with or without the bailout, the inflationary pressures will continue to weaken the U.S. dollar, increase other countries' needs for capital and imports, and generally slowly increase inflation at every level...whether it's base metals or food materials. The correction in Oil and Precious metals has left them still above their long-term trends frm 2002-Sept 08.
139 points
mugsy answered one year ago …
I would wait for the next pullback in gold prices, going down to test its recent lows of $739.80 I think the chances are good that it will go back close to that level, around $760.00, I would consider a good entry point. This depends on when the bailout happens If the bailout happens sooner, gold may not go back to that level. There is lots of volatility in this market. I would buy silver at the same time. Silver has industrial uses and will be more in demand, so supply will decrease, with limited mining or new silver finds. Gold is limited as well and the supply continues to derease. That is a good play against the weakening USD. Investors will be looking for something of a solid asset, not something in paper that is continually weakening in value, due to overprinting in efforts to secure bad debt.
I think the AIG bailout will happen. Polititians are stumbling over each other in their efforts to look good in their respective states and show how they don't appreciatate their tax payers footing the $700 Billion bill. Rightfully so that tax payers should be royally pissed off!!! The CEO's and upper level executives should be paying back with their bonuses. The election is only a month away, but this market may not want to wait that long for the dicision that needs to be made. Not bailing out AIG would be a far worse scenario. Too many markets are intertwined.
AS Oldman says, and I agree, with inflation base metals and food prices will increase. Precious Metals also. I am very bullish on Oil, Gold and Silver. I have stated before that I think Gold will go to $1500.00 an ounce in less then five years. To me that would be an easy bet. I think gold will get to that level much faster then that, even within the next couple of years and surpassing that level. Deleveraging was a major reason to the selloff in comoditites, raising cash. Big money will come back into comodities in a major way especially at these levels.
