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BMO strategist Don Coxe is singing the praises of “the music of the metals markets,” whose final movement will be “the longest and loveliest performance of metals music in history.”

Although Coxe believes "we have entered the time when western metal demand will shrink in response to economic slowdowns. This will mean a modest slowing in the growth of the total world demand for metals." Nonetheless, Coxe asserts that "the global bull market for metals has just begun."

"When the commodity bull market began, the total global capitalization of mining stocks was less than the market cap of Microsoft and Cisco...Now, the major mines are the global giants."

Coxe asserted that what is needed "is to get the investment community to share the industry's new-found convictions about the impact of the Chinese-Indian renaissance. Already China's consumption of copper is roughly twice America's, and its demand for iron ore dwarfs U.S. demand. This is no mere hiccup, but a hinge of history."

INVESTMENT RECOMMENDATIONS

1. Coxe advised that long-term investors ‘should remain heavily overweight commodity stocks, including the base metal stocks. As the bear market grinds on, use days of stock market weakness to add to commodity stock exposure. They not only remain the asset class with the best earnings outlook, but remain the asset class that is least understood by conventional asset allocators, who still see them as cyclicals dependent on OECD growth."

2. "In the near term, gold will continue to outperform stock markets and to act as a form of hedge against two kinds of shocks-financial panics and inflation stocks.

3. "With the commodity groups, continue to emphasize investment in companies with long-duration unhedged reserves in the ground in politically-secure regions."

4. "Long-term oriented investors should use any temporary pullback in base metals producers to build their portfolios for the Final Movement of the Sonata-which will be the longest and loveliest performance of metal music in history.

Zdroj: MiningW

10.03.2008

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."   Alan Greenspan