Monday, March 7, 2011

6 Years And Counting: Why Investing In Commodities Is Still The Way To Go

Back in 2005 I commented in an article that “my investment portfolio is almost exclusively invested in a basket of commodities (gold, silver, potash, uranium and crude oil) of which the bulk is precious metals. A third of my investments are in gold and silver bullion and a range of individual commodity-related stocks, from the very large producers to the very early stage small junior exploration companies, or their long-term warrants where they exist. Two thirds are in precious metals ETFs.”

It is now 2011 and my rationale for doing what I did back then has stood the test of time and, I expect, will continue to do so for many more years to come.

Let me explain why I still think such a basket of commodity-related assets is the only way to go. I also encourage you to read my recent article entitled “Confessions of a Conservative Investor” here in which I explain why I believe there is nothing speculative about investing in commodities and why, in fact, they are the ideal investments for cautious investors.

Detail Sources:

Coal, Not Yet A “Fossil”
Most of us know coal as a dirty, black, smelly fossil fuel that has made investors some clean, green and sweet profits recently. I believe that investment in coal remains bullish,and here’s why:

1. While the media focuses on new energy technologies, the truth is that less than of power produced worldwide is through solar and wind. While there is obviously growth potential, the cost outweighs the hype in our present economic environment.

2. Natural gas supplies only 20% of electricity globally.

3. Steel production uses over 10% of world coal production. 70$ of the world’s steel
production requires coal as the primary energy source. It takes approximately
1300 lbs. of coal (coke) to produce one ton of steel.

4. Over 40% of the world’s electricity comes from coal-fired plants.

5. China,the worlds largest consumer of coal, with even more coal-fired power
plants coming online, is betting on fossil fuel even as it sells alternative energy technologies to the West.

6. Coal usage is expected to trend up over the next decade. Cleaner coal technology
is already showing improvements in carbon and other pollutant emissions.

Detail Sources:

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