Metal Strategy - Monetary policy is helping to reflate metals prices commodity crunch and the credit crunch are linked to the same market failure. A decade-long misallocation of capital has seen too much money going into real estate and durable goods, too little into natural resources. Naturally, utilization rates in the metals & mining sector have only fallen modestly in spite of the collapse in global industrial activity. Going forward, if government policies are successful in reigniting growth, physical commodity supply constraints could resurface, resulting in more commodity price inflation. We like Zinc Nickle and Gold.
Global Metals & mining: Resources: back on track Recovery underway, perhaps even another boom... Confidence & liquidity have returned to Resources after 2008Q4's price correction plus six months of trading grief. Curiously, utilization rates in the metals & mining sector have only declined modestly, such that going forward, if government policies successfully refire growth, physical commodity supply constraints could resurface, resulting in another cycle of commodity price inflation. Get some zinc, nickel & gold; neutral copper; avoid ally. Iron Ore glut looms large; China & India buoy the coals.
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