Once we broke support a few months ago in the metals market, I began pointing to much lower levels b...
Hot Commodities That Aren’t Gold, Oil
04/27/2012 4:35 pm EST
Gold and oil may get the headlines, but platinum, copper, and natural gas are among the lesser-known commodities that present exceptional opportunities for traders, says Mark Leibovit.
We’re here with Mark Leibovit to talk about the outlook for strategic metals like platinum and palladium and other broader indicators of the economy.
Well, platinum and palladium are important, as you know, because they’re used in industrial purposes, primarily the auto industry. We can also throw copper into the mix as an industrial metal.
One thing about platinum that’s real interesting is that it’s been trading for the last couple of years at a severe discount to gold when historically it had been at a huge premium. So I think there’s a tremendous value in platinum.
This is going to be a big catch up. It’s a rarer metal and there are all kinds of uses for it besides the auto industry. There’s a lot of value there.
Palladium: same thing. Palladium has got huge potential. I think it was the year 2000/2001 when palladium traded for $1000 an ounce. It got down as low as $175/$200 and then got to $700, and then after it was back in the $700 range, I think it dipped down to $400. It’s been all over the place.
It’s a great opportunity if you’re a trader to catch some of the swings in the palladium and the platinum market. I think both are catch ups.
Backing up to copper, it’s very important, and I use it as one of my leading indicators for the world economy. You want to see copper strong. It has been a leading and coincident indictor. If copper breaks out above $4 a pound, I have technical projections going as high as $7 a pound in the next few years.
China and India and the rest of the world are growing, and we keep thinking about our problems in the United States, but we’re small compared to them. If you’ve been to China recently, as I have, you just can’t believe what’s going on. I’ve been there a couple of times in recent years and it’s like New York City brand new.
You know, brand new streets; it’s spic and span; amazing skyscrapers going up; tremendous building; and similar things are starting to happen in India, so a huge population base, and copper is going to be an ingredient.
Let’s see if copper can start moving here, because, again, I think that would help support the bullish cash for the stock market, as well as for the other metals like platinum and palladium.
We can also talk briefly about crude oil, which has been making highs. Apparently, Iran is cutting off supplies to Europe, and the world’s growing. We may get used to $125 to $150 barrels of oil, and particularly if there is ever conflict in the Middle East with Iran and Israel, forget it. Who knows where crude oil could go then?
One of the dumbest things we’ve done in the US is not encourage the building of that pipeline to Texas or down to the coast versus letting Canada have it. We really needed that energy. But natural gas should also start to participate, because as oil starts getting higher and higher, the need for a cheaper fuel is there.
We have an abundant supply of natural gas (in the US), and while I don’t think natural gas is going to explode because we have a huge supplies, I think it could start doing better. So I’m actually long the natural gas ETF (United States Natural Gas Fund (UNG)), thinking we could see a little play here, particularly as crude oil goes higher.
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