Thursday, September 29, 2011

Gold or Crude?

I have been following the commodities markets for a while now.Unlike the 'specialists' I leave the predictions to the pundits.Yet the feeling remains that the co relation between commodities is a topic that needs more exploring.

Everytime I switch on the television someone or the other is delivering a monologue on why they think what will happen.Same with long winded columns in the pink papers.

The Economic activity in the US is definitely slow but nowhere near a double dip neither has it stalled.The growth concerns of the Global Economy are frankly overdone.For the year I would buy crude and sell gold at current levels with the expectation that a growth of anything over 2% in the developed world and 7-8% in the developing BRICS economies would revive crude demand and the overlong speculative positions in gold would reduce.

Listening to Jeff Imelt say that the confidence on the ground amoungstUS cos is greater than it seems from commentors is a very intuitive comment.I am yet to see any demand destruction in India and even the Chinese are aiming for a soft landing in growth rates to bring down inflation and till now there have been no drastic repercussions.

Again the retail investors are sitting on the sidelines and not buying frontline stock,some of the top companies are available below 1 of Book Value and a PE of  8-12.Are they repeating the historic mistakes of the past?

I feel 8 to 10 months down the line a lot of investors would be rueing why they did not start investing...but then thats what happens all the time.....!

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