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Archive for the ‘Commodities’ Category

The best shorting opportunity for 20 years

According to Doug Casey, the well known American investor and commodities analyst, interviewed by the Sunday Times in London, the bonds issued by developed market governments are “the best short sale since Japan twenty years ago”.  US Treasuries, he says,  are “a triple threat to your wealth. Interest rates are going to go up, the currency is going down and there is the default risk”.

He has been buying more hard assets and topping up his holdings in gold and silver, “mainly as a store value”. He doesn’t believe the Federal Reserve when it says it will not restart quantitative easing.

Most US government debt is short term – either of one or two years duration – and is paying less than 1%. Its deficits, on the other hand, are more than a trillion dollars a year for as far as the eye can see. Who’s going to be stupid enough to lend money to a bankrupt entity at less than 1% a year? Only the Federal Reserve is going to buy the debt, hence more QE”.

Asked about the best value commodities, he says only two are currently cheap – natural gas and cattle. He owns cattle directly these days, on his farm in Argentina, though he used to own an ETF, and natural gas exposure through exploration companies in North America.

Written by Jonathan Davis

June 12, 2011 at 8:36 AM

Thoughts on the markets

Some further comments on the outlook for markets:

In one of my first FT columns this year, I made the observation that top of my wish list for 2010 was an increase in interest rates and bond yields. Although this sounded a bit Irish to some readers, who were still obsessing about the risk of a double dip recession and sovereign default, the point was that rising interest rates would be an indication that the private sector recovery was finally beginning to get underway – good news, in other words, rather than bad news, as Martin Wolf correctly pointed out in his FT column this week.

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Written by Jonathan Davis

December 16, 2010 at 4:37 PM