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A Resourceful Pair
03/31/2006 12:00 am EST
Individually, Mary Anne Aden and Pamela Aden are each brilliant. Together, in The Aden Forecast, they are an unbeatable team in analyzing the metals, energy, and natural resource sectors. Here’s their latest on these markets and their top stock and fund picks.
"The metals, energy, and natural resource sectors remain very bullish for the long-term, but it now looks like a normal medium-term downward correction is starting. This was overdue following the steep rises and we continue to recommend holding for the long-term, keeping a large position in this area. We know that one of the major factors driving the mega upmoves in gold and tangible assets has been massive US debt and unprecedented global financial imbalances.
"But about six months ago we also noted that aside from these factors, the biggest forces to fuel the metals and commodity rises will be China’s growing power, changing weather patterns, and the war on terror. Further, all eyes are now focused on Iran. The ways things are going an attack on Iran can’t be ruled out. If it happens, gold and oil would soar. The possibility of Iranian oil supply disruptions, on top of Iraq, would likely fuel a huge rise. The same is true of gold. Investment demand has been growing, in large part due to what’s happening in the Middle East. That’s been keeping upward pressure on gold, as well as silver and other metals.
"We feel the bull market rise in gold still has a long way to go, so a downward correction would be normal.Gold’s bull market turns five years old this month, yet it’s only starting to draw worldwide attention. But as hot as it has been, it still has a long way to go. This bull market has super power behind it because it has growing global demand, unlike anything seen in the past. China and Russia, for example, were closed markets before. This huge influx into the markets will greatly impact the extent of this bull market.
"Just in the US alone, the ease of buying gold via ETFs is also having a big impact. In addition, silver also has a long way to go in the years ahead before it reaches its final destination highs. The supply-demand situation alone could cause silver to explode. The investing world is thirsty for more ways to buy silver, which is why it shot up when the good possibility of a new silver ETF became news. Once it’s available, we will recommend its purchase by investors.
"The best way to invest in a major move is to buy and hold. This means riding through weakness. Overall, it’s safest to keep more in physical gold, silver, or StreetTracks Gold Trust (GLD NYSE), iShares Comex Gold (IAU ASE), and Central Fund of Canada (CEF ASE). Wait to buy new positions. Crude oil is quietly forming an intermediate bottom. Keep your energy stocks and gradually buy new positions. Among the exchange traded funds, the iShares S&P Global Energy Sector Fund (IXC ASE) and the iShares Dow Jones Energy (IYE NYSE), and Energy Select SPDR (XLE ASE) are rated as buys."
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