Technical and fundamental investors are fond of using indicators
to divine which direction stocks may be headed. These cues can come
from almost anywhere: interest-rateyield curves, put/call ratios,
manufacturing surveys... you name it.
Some even use the Super Bowl as a prognosticating tool.
Personally, I monitor a wide variety of indicators, but only to
keep my finger on the pulse of the globaleconomy . There's no
silver bullet that accurately tells us when to buy and sell. If
there were, someone would have uncovered it a long time ago.
That being said, if I were forced to pick a single barometer that
could predict the weather for all types of assets, it would be
It's no secret that China has become the world's growth engine. And
the bullish outlook for natural resources in particular is
predicated on the assumption that China's booming economic
expansion is fueling huge demand for coal, copper and just about
you can think of.
Any serious signs of deceleration (like we saw in 2008) could
trigger a swift selloff. And
is the one roadblock that could prompt Beijing to deliberately step
on the brakes.
Thanks in part to bold stimulus initiatives (and the stubborn
refusal to let the yuan appreciate), prices have been on the rise,
particularly in overheatedreal estate markets such as Shanghai. But
we're not just talking about property. Overall consumer inflation
rates have remained above the government's safety zone for nine
straight months, touching 5.2% in March and 5.4% for the first
In response, thecentral bank has cut off the loose credit spigot.
Bank reserve requirements have been tightened six times during the
past six months, and interest rates were just hiked for the fourth
Those moves won't automatically bring this locomotive to a
screeching halt --
gross domestic product (
still surged 9.7% this quarter. But any cool-down will be met with
a hostile reception from investors. With that in mind, I'll be
watching diligently for signs that China's inflation-fighting
tactics are blunting growth, but the train still seems to be
chugging down the tracks.
And as long as China remains growing and hungry for natural
resources, there are profits to be made. Especially in copper, a
key building block for any rapidly growing
. Copper wiring, for example, is essential in plumbing, power
transmission, electrical circuitry and endless other applications.
There's no arguing that demand is on the rise. Prices on the London
Metal Exchange recently touched $10,100 per ton -- a new all-time
And I think copper prices will move higher...
A few weeks ago, about 500 delegates representing mining
companies near and far gathered in Santiago, Chile, for the 10th
annual World Copper Conference came to the same conclusion: They
won't be able to meet the world's demand for copper this year.
Action to Take --> I
expect copper inventories to dwindle and prices to ascend further
into record territory, possibly breaching $11,000 per ton. One of
my top pick to tap into this supply/demand imbalance in
Scarcity & Real Wealth
Freeport-McMoRan Copper & Gold (
. The company (which mines 4 billion pounds annually) rakes in $260
million in incremental operating cash flows for every $0.10
increase in copper prices.
Profits are likely to explode as copper prices continue to
-- Nathan Slaughter
P.S. -- I recently put together a free webcast discussing
another area where scarcity is rearing its head and offering
investors a great opportunity to profit from a growing
supply/demand imbalance long before the market's conventional
wisdom prices it in. Click here to view it.
Disclosure: Neither Nathan Slaughter nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.
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