Commodities Archives - Page 5 of 29 - Money Morning - Only the News You Can Profit From
Profit from Rising Silver Prices with These Three Picks
The gain followed silver's rise to a five-month high during trading Thursday.
Silver is the best performer for precious metals with its 16% increase in 2012, reported Reuters. This compares to gold's 8% percent rise.
For silver and gold, recent price increases have come from greater expectations for additional monetary easing from the European Central Bank and the U.S. Federal Reserve. On Thursday, the ECB added some fodder for this with its "outright monetary transaction" (OMT) program.
With QE2 in 2011, silver rose to almost $50 an ounce.
Investment demand should also increase for the metal thanks to the effect of global monetary easing.
Brad Cooke, chairman and chief executive of Endeavour Silver Corp.said to MarketWatch that it will "take off again as we see more monetary inflation/economic stimulus programs by governments in America, Europe and China."
He sees silver hitting the $40 mark within the next months before it falls off again.
But for silver, there's more than just monetary easing affecting its prices.
Editors Note: Here's all the info you need to buy physical silver. Click here.
Paul Mladjenovic, author of "Precious Metals Investing for Dummies," said to MarketWatch that "Oversized short positions in the silver futures, continued industrial demand in Asia, investment demand in the U.S. and the new applications for silver in areas such as solar power, [radio-frequency identification] technology and other new developments" are all a net positive for silver's price outlook."
He expects silver prices to "zigzag upward toward $100" an ounce by 2014.
Why the U.S. Drought is Hitting Harder Than Most People Realize
This is an important update on the U.S. drought of 2012 and its impact on food prices, water availability, energy, and even U.S. GDP.
Even though the mainstream media seems to have lost some interest in the drought, all of us should continue to be aware of it since its ramifications are far-reaching.
As we discussed in this report, it's all connected to a larger pattern of exponential growth that is simply no longer sustainable. At stake is nothing less than the traditional American way of life.
This monumental drought has already led to sharply higher grain prices, increased gasoline costs (via the pass-through of higher ethanol costs), impeded oil and gas drilling activity in some areas (due to a lack of water), caused the shutdown of a few operating electricity plants, temporarily reduced red meat prices (but will also make them climb sharply later) as cattle are dumped in response to feed- and pasture-management concerns, and blocked and/or reduced shipping on the Mississippi River.
All this and there's also a strong chance that today's drought will negatively impact next year's Winter wheat harvest, unless a lot of rain starts falling soon.Hurricane Isaac certainly helped, but didn't go far enough.
Further, there will be a definite impact to U.S. GDP, which could add to pressures (excuses?) that the Fed may use to justify additional quantitative easing (QE) measures (otherwise known as 'printing more money').
Here's an in-depth look at why the U.S. Drought of 2012 is far from over…
Ignore the Doom-and-Gloom Crowd When They Talk About $40 Oil
I just returned from a week down South with a few of my energy clients. It's good to get my hands dirty and remind myself firsthand what is going on at the project level of some of the country's top energy companies.
But when I returned home this weekend, I made the mistake of flicking on the television and opening the newspaper.
I can't believe that the pundits are now predicting that oil will fall to $40 a barrel. They also are projecting that the entire natural gas sector is going to collapse.
Here we go again.
Yes, we are wrestling with an energy sector that remains gun shy on elements from market volatility to geopolitical tensions.
And sure, $40 a barrel is possible, but only in an improbable situation where global demand for oil completely collapses, along with the world economy.
But we are in a new reality. And such doom and gloom predictions are highly oversimplified and potentially dangerous to you as an investor.
Oil Prices Promise to Head Higher As Mexican Production Dwindles
In addition to Iranian threats and growing demand, dwindling production of crude in Mexico promises to push oil prices higher as well.
Mexico is the third biggest exporter of oil to the United States. That's bad news for the U.S. economy which always gets hit when oil prices rise.
From 2004 to 2008, the U.S. Department of Energy reports such jolts, along with OPEC price manipulation, cost roughly $1.9 trillion. Plus, a recession followed each major blow.
According to the U.S. Energy Information Administration (EIA), Mexican oil production reached a peak of 3.2 million barrels a day in 2008. And by 2011, it wasn't even producing 3 million barrels a day.
Since then oil production has slipped to 2.5 million barrels a day.
Worse still, Mexico could actually become a net importer of oil within a decade if it cannot find fresh discoveries to make up for the 25% production drop since 2004 and fails to change its current policies.
Oil Prices are Higher, But It Won't Be Much Help for Alternative Energy
Well, not this time.
During the run up to mid-$4 gas and $147 a barrel oil in 2008, many assumed these costs would continue to advance. That made alternative sources – especially renewables such as solar, wind, biofuels, and geothermal – more attractive to investors, politicians, and energy enthusiasts.
Alternative sources are more expensive than conventional oil, gas, or coal. They are, however, more environmentally friendly. Paying those higher costs was regarded as a tradeoff for cleaner energy sources and a reduction in emissions.
Today, that view has changed.
U.S. Oil and Gas Squeezes Alternative Energy Prospects
It's part of the reason why I've recently avoided alternative energy companies like First Solar (Nasdaq: FSLR), Canadian Solar (Nasdaq: CSIQ) or SunPower Corporation (Nasdaq: SPWR) in my Energy Advantage portfolio.
The economic downturn has made reliance on more expensive energy sources a difficult proposition to accept. Renewables are hardly a convincing argument anymore, especially during a sluggish economic recovery.
Yes, increasing oil and gas prices should reduce the spread between conventional and renewable, thereby providing stronger arguments for change. And proponents argue that alternatives provide an enhanced advantage given that they can also be domestically produced.
Just don't bet on these arguments holding up this time. Here's why.
Why a Strategic Petroleum Reserve Release Won't Help Oil Prices or President Obama
With oil prices showing no signs of retreat during the final months of the U.S. presidential campaign, beltway insiders are turning to one misguided solution to combat rising oil prices.
Releasing oil from the Strategic Petroleum Reserve (SPR).
Trial balloons floated all over Washington during the past few days. The only reason politicians didn't move on this sooner (say a few months ago) was the price level.
Until the last month or so, both oil and gasoline prices were heading in the other direction. Near-month futures contracts for West Texas Intermediate (WTI), the crude oil benchmark traded on the NYMEX, were below $78 a barrel in intraday trade toward the end of June, while the same futures for RBOB (the NYMEX traded gasoline contract) were at $2.55 a gallon.
At the time, all the sage pundits predicted that oil would fall below $60 a barrel; some even suggested that prices could approach $40. On the gasoline side, these same wise guys were proclaiming we may see prices at the pump breach $3.
Everything has changed quickly.
Yesterday morning the markets opened with WTI 23% higher than late June and RBOB up by more than 20%. Oil stands at more than $96 a barrel in New York, while Brent has exceeded $116 a barrel in London. And retail gas prices are once again approaching $4 a gallon.
Recently, I discussed why oil prices are moving up. But for some politicians, including the fellow running for reelection at 1600 Pennsylvania Avenue, those prices are becoming a job liability.
So it's back to hitting the SPR.
But there are four reasons why tapping the SPR won't make oil prices any cheaper in the end.
Maybe you should let your Congressman know about them…