E.D. Hart

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  • Hard Assets Investing: An Interview With Brad Zigler
    This seems to be a balanced article. I have read Swenson's book and the Ibbotson study and they are well researched, lucid documents.

    One problem--I don't agree with Swenson about one little item. As a small investor (non-institutional) an individual can participate although not replicate what Swenson does in the real asset space.

    It is through ETF's that the average retail investor has unprecedented access.

    Sure, you cant replicate the complicated trades of the big traders, but so what?

    If there is a major commodity bull market destined to last 5-10 more years--which seems very likely--it makes sense to buy and hold commodity ETFs (CUT, SLV, DBA for example) until money supply growth and inflation moderate.

    Silver, for example likely has significant upside from here, as does natural gas--two undervalued commodities right now.

    After 25 years of falling inflation and interest rates, it appears likely we are headed to a stagflationary environment. Such an environment favors commodities.

    It is wise to allocate a portion of your overall portfolio to some commodity base, as bonds and stocks trade sideways.
    Apr 07 16:32 pm |Rating: 0 0 |Link to Comment |View article
  • Why I Don't Own Commodities
    Oh, I cant help myself, but I have to comment:

    "The hubris of rich liberals who..." can only be outdone by the hubris of even richer neo-conservatives who wage wars for "freedom" and "democracy" based not on facts, or the wisdom of generals with a lifetime experience in the arts of war, but on faith, ideology, and gut instincts...and send 4000 Americans to their undeserved deaths.

    (Please don't remind me they volunteered to serve--they didn't volunteer to serve under false pretenses, lies, manufactured evidence, and propaganda/misinformat... campaign).

    But its just a thought, probably has nothing to do with commodities or inflation...or oil, or future wars that will effect these same trends....
    Mar 27 16:50 pm |Rating: 0 0 |Link to Comment |View article
  • Why I Don't Own Commodities
    Subtract emotion and you have three pillars of the commodity investing hypothesis. Commodities will have ups and downs, but continue to move in an upward trend because:

    1) ETF's globally are taking larger and larger share of commodities out of the spot market--in some cases ETF demand is the largest open long category in the COT reports. This is institutional money, buy and hold, hedge funds that don't want exposure to futures, sovereign wealth funds, and managed institutional accounts. In contrast to the sub-prime fiasco, where leverage made the bubble, most of these ETF commodity investments are unleveraged, and not subject to interest rates, margin calls, or collapse in panic selling.

    I hate to say it, but I'm going to: "this time it its different" because it really is different--we've never had a commodity market with the new demand made available by ETF's. see: www.investmentrarities...
    Ted Butler archives "Still A Great Trade" March 11, 2008 Letter.


    2) Rising demand from BRIC's, and consequent supply/demand imbalance. Saudi oil is not going to raise spare capacity going forward, neither is Canadian Oil sands. Supply technically isn't the problem but daily production growth. Petrpobras discovered a big feild that is a 7-8 years away from production, same with Venez. Oil sands, same with Devons big find with deep Water Gulf fields...
    many years away, and not enough to keep pace with consumption.
    It is different this time (thats twice) because we have lost meaningful spare capacity in oil especially, but other commodities as well.

    Moreover, higher prices are not necessarily in feedback with lower demand. China subsidizes gasoline prices, keeping them artificially low, at loss of billions to PTR.

    3) Inflation, inflation, inflation---by definition the growth in the money supply at a rate that surpasses the economic growth and trade growth. Thats why you see commodities rising in all currencies--because all countries (some worse than others) are engaged in competitive currency devaluation. In commodities and currencies as in Physics, there is no non-arbitrary frame of reference (with the exception of the speed of light) and so, there is no standard currency. The closest we get to a non-arbitrary currency is a basket of commodities. The markets are telling us a strong message that all currencies are being inflated and losing value--that is the message of commodities.
    Mar 27 16:40 pm |Rating: 0 0 |Link to Comment |View article
  • Why I Don't Own Commodities
    Why not invest in commodities...I didn't understand the authors reasons...did he state any?

    Two relatives of mine, in their 50s and 60s sent me savings bonds (series ee) when my daughter was born three years ago. This is well meaning but foolish. I am planning on taking the bonds, cashing them, and buying Apache oil.

    Which would you rather fund your son or daughters education with--paper debt of a bloated and undisciplined nation---or the single most actively traded commodity on earth?

    After the depression and into the 50s, people stayed invested with bonds because stocks were "too risky". This in spite of the recovery in the markets. There was no doubt in their minds that bonds were safe, and less risky.

    They wrote articles like, "Why I dont invest in Stocks"--everyone knew that bonds were the way to go and protect your wealth in the deflationary times, and next depression.

    Now, on the heels of the worst bear market in commodities possibly ever (1980 to 2002) the commodity market has been on fire.

    But old beliefs die hard. Stocks must be the way to go, and every year people express amazement that the commodity bull still has legs. Surprise of what great heights gold, oil has achieved, and utter skepticism that commodities will go higher. There is always supreme confidence in those that fight the last war, that they know the way.

    "There must be a bubble. It must be hot money chasing too few goods. It cant last because it doesn't fit my mental model. My confidence tells me so." Ranks right up there with "I'm the decider".
    Mar 27 01:00 am |Rating: 0 0 |Link to Comment |View article

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