Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast 2024 - 15th June 24
Gold Price Consolidating at High - 15th June 24
NVIDIA Stock Market: Price Prediction for the Future - 15th June 24
When Will the Boom/ Bust Rollercoaster End? - 15th June 24
Stock Market Trouble Lies Ahead. Are You Ready For It? - 15th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Crude Oil, Two MUST-OWN Investments!

Commodities / Investing 2009 Nov 10, 2009 - 03:51 PM GMT

By: Larry_Edelson

Commodities

Best Financial Markets Analysis ArticleI put out my first major buy signal in gold in early 2000, when gold was trading at about $260 an ounce. I said then that gold was an easy double, moving to at least $500 over the next two years.

I told my readers to add to their gold positions in October 2004, when gold crossed above the $400 level …


And again in September 2005, when gold blasted through $450 an ounce.

I added again, even telling subscribers to increase their core gold allocation from 10% to 25% — in September 2008, when gold closed above the $860 level.

Now, gold has thrust to within an eyelash of the $1,100 level. But gold has much more to go to the upside. My minimum target: $2,300 an ounce, with a very high probability that the yellow metal will ultimately exceed the $3,000 level, and perhaps move as high as $5,000.

Why Gold Is Poised to Rocket Much Higher

For centuries, gold has maintained a basically stable value in terms of purchasing power. That’s why investors pile into it whenever other markets look shaky.

Gold is real money. Unlike stocks or bonds, gold has no debts, no earnings, no boards of directors, no funny accounting statements, and no obligations to anyone but itself.

Gold is the purest investment in the world. While paper money can be printed or devalued at will, as is happening now ad infinitum, the same cannot be said for gold.

All the gold ever mined can fit into a 62.3 foot cube!
All the gold ever mined can fit into a 62.3-foot cube!

Of course, there isn’t much gold to go around. All the gold ever mined in the history of the world (about 151,000 metric tons) can fit into a cube measuring only 62.3 feet on each side. And gold production is declining despite today’s elevated prices.

Just one example: Over the last 10 years, gold production in South Africa has plummeted more than 50%!

So, the way I see it, plunging production, rising demand — and a severe lack of investor confidence in the U.S. dollar — add up to one thing: much higher gold prices to come.

It’s why China has been buying gold.

And it’s why India recently purchased 200 metric tons of gold from the International Monetary Fund (IMF) for $6.7 billion.

That’s more than 7.054 million ounces of gold, now worth over $7.37 billion.

And it’s why, for me, gold is absolutely the most important asset to own going forward.

If you haven’t already followed my recommendations in gold, it’s not too late: Here are four primary ways to grab your stake in the only lasting form of real money there is on the planet …

First, buy bullion. For small amounts, a convenient vehicle is one-ounce and 10-ounce gold ingots. But don’t go overboard or else you’ll find yourself with transport and storage issues. For more details on how to buy physical gold, see my October 5 column.

Second, consider the SPDR Gold Trust (GLD) exchange-traded fund. Each share represents 1/10 of an ounce of pure gold. And all the costs of storing and insuring the metal are covered for you.

Third, look to gold mutual funds such as the Tocqueville Gold Fund (TGLDX), U.S. Global Investors Gold and Precious Metals Fund (USERX) and U.S. Global Investors World Precious Minerals Fund (UNWPX). You can pack them away, with a view toward holding them for at least a couple of years. In my view, these funds could double, triple, even quadruple, over that timeframe.

Fourth, invest in select individual gold stocks. But be careful here. The irony of today’s bull market in gold is that some gold mining companies may actually go out of business as the price of gold soars.

Reasons: Some still hedge too much of their gold production and/or reserves. Others don’t have access to adequate capital financing. As I always remind my Real Wealth Report subscribers, you need to be very selective when it comes to gold shares.

But Gold Is Not the Only Hard Asset You Should Own …

Not by a long shot. I believe every investor needs to follow what the world’s biggest company — with the world’s largest cash flow and biggest profits — is doing. Yes, I’m talking about CHINA.

Indeed, while the rest of the world has been consumed by the global financial crisis, China has been reaching into its deep pockets and circling the globe to corner much of the world’s oil supplies.

China is in the process of cornering a large portion of global oil supplies.
China is in the process of cornering a large portion of global oil supplies.

Its deals are growing more ambitious as Beijing outsmarts the rest of the world and looks to meet its burgeoning oil demand. In the past decade, China’s oil consumption has doubled to 8 million barrels a day.

And it’s estimated that it could easily double again in the next decade as the number of Chinese joining the ranks of the middle-class swells.

China has now ventured into …

Arrow  Kazakhstan, to build a 3,000 km pipeline to bring oil back to China.

And it will grab up to 20% of Russia’s exports by the end of 2009 when the pipeline is linked with fields near the Caspian Sea.

Chinese controlled oil output in Kazakhstan is now at about 300,000 barrels per day (b/d) — more than one-quarter of China’s total foreign production.

And to further tighten its grip on the region’s oil, China recently gave Kazakhstan a $10 billion loan repayable by future oil supplies and equity in a Kazakh oil producer.

What’s more, China’s sovereign wealth fund recently bought 11% of KazMunaiGas Exploration and Production, which is majority owned by Kazakhstan’s state oil company.

Arrow  Sudan, where China produces about 225,000 b/d.

Arrow  Angola, where since 2007, China has been importing about 18% of its oil needs.

Arrow  China also has agreements with countries such as Burma, Iran, and Guinea, but that satisfies only a fraction — 14% — of what China needs through its overseas production.

Beijing still has a lot of oil to secure. And its three main state oil companies — CNOOC, CNPC, and Sinopec — are going toe to toe with the big boys to do just that …

Arrow  CNOOC has proposed to buy 6 billion barrels of Nigeria’s oil reserves — much of which is from soon-to-expire contracts that belong to the western oil majors.

The company also recently announced it would compete with ExxonMobil to gain control of almost a quarter of Africa’s largest offshore oil field, Ghana’s Jubilee field.

Arrow  In March, Sinopec made the biggest Chinese oil takeover of the year when it spent $7.6 billion to buy Swiss company Addax, which has operations in Nigeria, Gabon and the Kurdish region of northern Iraq.

Arrow  Last week, CNPC, China’s largest oil and gas producer and supplier, teamed up with British Petroleum (BP) to develop Iraq’s Rumaila oil field, bringing the field’s oil production up from 1 million b/d to 3 million b/d — ultimately giving China a stake in 37% of the production or over one million b/d.

My view: Like gold, everyone should also have a core stake in black gold, oil. So if you haven’t already followed my oil recommendations, it’s not too late here either.

Here are four primary ways to get your stake in black gold …

1. The Energy Select Sector SPDR (XLE), an ETF comprised of the world’s top oil and gas exploration and production companies. Recommended previously in this column at the $42 level, XLE is now trading over $56 a share, for more than a 34% gain.

2. The iShares S&P Global Energy Sector Index Fund (IXC). This ETF invests at least 90% of assets in the underlying securities of the S&P Global Energy Sector Index. Since recommended in early August, this ETF is up almost 8%.

3. PetroChina (PTR), one of the leading Chinese energy conglomerates, a must-own for the long haul. Previously recommended in this column at the $86 level, PTR is now trading at about $125, for a 45% gain.

4. CNOOC Ltd (CEO), another leading China oil and gas company, and another must-own for a core holding in energy. Previously recommended at the $107 level, CEO is now fetching more than $153 a share, for an open gain of better than 42%.

I suggest all be bought now, if not owned, and held for the longer-haul, along with my gold recommendations.

Best wishes,

Larry

P.S. To get all of my specific gold and oil recommendations the moment I pull the trigger, subscribe to my Real Wealth Report. It will be the best money you ever spent, guaranteed!

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in