BMO's Coxe Predicts Gold and Commodity Stocks Will Reach New Peak During Next Global Recovery

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BMO Global Portfolio Strategist Donald G.M. Coxe stressed that "gold and gold mining shares remain the best way to reduce endogenous risk within an equity portfolio. Although inflation is bound to recede for at least a few months, the amount of stimulus being injected into the global system will prove highly intoxicated once the downturn bottoms out, and gold should move to new records."

BMO Global Portfolio Strategist Donald G. M. Coxe forecasts that commodity stocks will reach new profit peaks as they "lick their wounds, while still recording high returns on equity and still boasting high quality balance sheets.

In his report, Basic Points Homeicide: the Crime of the Century, Coxe predicts, "When the next global economic recovery takes flight, their [commodity stock] profit will reach new peaks."

Although gold prices actually fell last week (recovering again later), delighting central banks and giving Fed Chairman Ben Bernanke greater freedom to cut interest rates in the first financial crisis in more than thirty years in which gold failed to rally, Coxe firmly remains bullish on gold.On July 13th, many of the best-performing equity hedge funds were heavily invested in commodities and commodities stock, when U.S. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke deliberately acted to force hedge fund liquidation of commodity futures and commodity stocks...

But the bright spot in the panic-driven selloff in commodity stocks is that China could make "several bold and assertive" commodity acquisitions abroad, using some of its vast hoard in Treasuries and Fannie-Freddie paper to buy reserves in the ground in politically-secure areas of the world-or undersea," he suggested...

Meanwhile, Coxe stressed that "gold and gold mining shares remain the best way to reduce endogenous risk within an equity portfolio. Although inflation is bound to recede for at least a few months, the amount of stimulus being injected into the global system will prove highly intoxicated once the downturn bottoms out, and gold should move to new records."

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