No doubt the sense is that reflation trade is cooling down. I agree that it is, but then the question begs, what do you want to hold as money, US Dollars? Could there be a crack-up boom, or flucht in die sachwerte? Answer in my mind is that's still likely, as long as the MoP is tightening lite. And judging from the line-up of the specs and commercials,
Message 20080744
I have to conclude that's what's going to happen. 1-1.75% F3IP won't put much of a dent in inflation, or the flight to real goods. Plus you don't need reflation now to have sky high commodity prices, just because of the shortages out there. So what I'm saying is that the reflation trade may be the wrong playbook now. It will be more about what money to hold, the remaining disequilibrium in metals and the company dynamics/fundamentals.
I read one comment that I really agreed with, that was that commodities (or PM stocks) aren't like some buy and hold growth stock that people are used too. They are high beta, and pretty wild. And they really trade on sentiment. They are also hard on one or two shot dabblers, you know the "I can only buy one and when types". That's because you'll buy cheap, and they get temporarilty marked down another 20%, like now. You have to pour money in when the blood is running on the streets. I haven't picked an exact bottom yet on these regular PM stock routs, but I've made huge amounts of money in them. I was bullish on them starting in the paint drying on the wall days in 2001. Then they had a great pop in about two months in 2002. After that rally, I remember going up to Vancouver to a gold conference, and to meet the companies I was involved with. Jackj and I prowled around, had lunch with John McCluskey and Chester Millar of Alamos. Jack will give you the sense of it, and now knows some of these outfits better than about anybody. Everybody was exuberant, and I came home and went oh-oh, and sold a lot of stuff. It took about six months to clear, and then there was the big March-Oct, 2003 rally. Then I spotted the same pattern magnified that was going on in mid-2002, and lightening up again. I hardly posted for six months at the very active PM thread I had establish.
Subject 51846
Before that it was blah, blah, blah, like here.
So here we are again, I'd say this is like early 2003. Actually, I think the risk in the companies I'm using is less than it was in early 2002, and early 2003. That's because they've raised money, and are more mature, and there's more going on. There's light at the end of the tunnel on when these get into production (or get munched), and there is a big market markup when that happens. This one could be special because it's coming off of panic prices, so I can visualize a bunch of two year, three baggers, even with $375 POG. If gold and silver spike, tighten your sit belts.
On another point, what to play? I have never cared for most of the majors or even mid-tiers, they are usually overpriced. I would rather own something that will be a mid tier in a few years. About the only major I like is WHT, but I'm not using it, at least yet. I've also gotten some mail about grassroot exploration plays. There are some good names, and guys like Claude Cormier do a good job of following such plays, but the best and most solid values are in these emerging production plays (they're really aren't too many either, rare goods) I've been mentioning. |
