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Monday February 01, 2010
Pro Timer favors oil and gold
By Curtis Hesler, editor The Professional Timing Service
Invest in assets that promise to increase in price as the dollar falls; this will insulate your portfolio from the damage that the ongoing deleveraging process will bring to the stock market and to other paper assets. It is instructive that although the 10-year yield is rolling over somewhat, having moved down from over 3.80% a few weeks ago to about 3.70% now, it is not breaking sharply lower as it has after past peaks. Consider also that the 10-year yield is up from 2.20% over the last 12 months. There is an emerging trend here. There is a gamble for you if you have fixed income/liquid assets to invest. The bet is that we will see yields on the 10-year and the shorter maturities much higher by year’s end. The way to play this is to do what may seem like pure folly - sit tight in short term paper. 
Don’t go overboard trying to maximize yield. I would stick to as short a term as possible - no more than one year - so that you will have the flexibility to move into T-bills once short term rates begin to run. I know you don’t get much for liquidity these days. Don’t fret it. It makes no sense to augment risk just to get another one percent. It is best to stay safe. I prefer bank CD’s, keeping in mind your FDIC insurance coverage. Bide your time. You will be glad you did. Thus, for now, stay short term and park your liquidity as safely as possible. The best capital gain bet this year will be in gold. While the Street was overly enthusiastic about gold last December, we took some money off the table, anticipating a temporary upside correction in the U.S. dollar and some consequential selling in gold and the mining shares. This is where the timing aspect comes into play. We have focused on buying, but only at lower prices during a correction. I am looking to Goldcorp (NYSE: GG) and Royal Gold (NYSE: RGLD) which are my top choices in the majors. In addition, crude oil is coming off as expected ... finally! I had been forecasting that a trip back to $70.00 is likely. This outlook is on track. Meanwhile, Blackrock Energy and Resources (NYSE: BGR) has been performing very well and can be considered on further weakness. Blackrock gives you a nice diversified approach to energy along with a decent dividend. At $23.00, it has an indicated yield of 7.00%. Sometimes the best investment strategy requires a little sitting and waiting. This is one of those times. Stash your cash and wait for the coming correction to unfold. We are going to see some great buying opportunities this spring. Learn more about this financial newsletter at The Professional Timing Service. |
News Flash
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Where should you invest in 2010? Preferably, you should stick to the heart of the matter and focus on crude oil and gold.