BMO's Coxe Hangs Tough and Optimistic on the Future of Commodity Stocks
Source: Mineweb.com (6/2/08)
Don Coxe, BMO Financial Group Global Portfolio Strategist sees gold and gold stocks becoming more attractive each week that global food and fuel costs rise along with writedowns on bank balance sheets.
"Because, during the 1970s, commodity stocks gave positive real returns at a time most other stocks were giving real negative returns," Coxe advised in his "Basic Points: The Traders of the Lost Arc" report. Although China is experiencing its worst inflation pressures in more than 15 years, the 100 Year winter storms were devastating and the nation is enduring the aftermath of one of its most damaging earthquakes, Coxe said, "we don't believe that China will collapse: it will continue to grow, albeit more slowly."
India is a more serious near term risk, according to Coxe. "India is the biggest loser from the dramatic price changes in oil, gas and grains. Its terms of trade have shifted negatively, and the fragile ruling Parliamentary coalition may well be forced into bad economic policies because of the power the food crisis gives to the Community Party."...
Among Coxe's investment recommendations are:
- Gold and gold stocks become more attractive each week that global food and fuel costs rise along with writedowns on bank balance sheets.
- Until the U.S. financial stocks stop declining, rallies in the S&P or NASDAQ are selling opportunities.
- The dollar failed to rise significantly even as U.S. stocks were rallying and economic forecasters were declaring that the worst of the housing problems were over. If it goes to a new low, it will drive even more global investment funds into commodities and/or commodity stocks.