Can-Do Commodities
Despite a recent pullback, metals and other materials look strong for the long term
By SUZANNE MCGEE
STEVEN LEUTHOLD HAS BEEN managing money -- his own and other people's -- for nearly four decades. During the runaway inflation of 25 years ago, he was among the millions of Americans who bought gold as a hedge. But even then, he never thought of himself as a commodities bull. "Commodities just weren't as interesting or attractive to us" as stocks and bonds, he says.
Today, however, Leuthold, who runs the money management arm of institutional brokerage Weeden & Co., holds a sizable position in metals. And it's not through futures contracts -- it's the real McCoy. Leuthold has amassed tens of millions of dollars' worth of ingots of silver, palladium, copper, aluminum and other metals -- and stored them all in his or his firm's name in metals warehouses across the country. He began buying last year, as metals prices began the most recent and most dramatic stage of a rally that took copper prices to a nine-year high of $3,030 a ton and nickel prices from a low of $4,000 a ton in 1993 to nearly $18,000.
The strategy has caused him some headaches. A fire at one warehouse, for instance, scorched some of his aluminum. But one thing that has not troubled Leuthold has been the drop in commodities prices over the past couple of months. In fact, as hedge funds and other speculators dumped metals, fearing a cyclical downturn, Leuthold says he plowed "another chunk" of his own money into a private metals partnership he started last year.
He is just one of a growing number of investors who once scorned commodities as too risky but now find them nearly irresistible. These investors and a number of other experts figure that commodities are in the midst of a long-term bull market, perhaps the strongest in more than 25 years.
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