Sunday, February 22, 2009

GDX/GLD

I was comparing some charts and I learned that last year when gold price was peaking, gold miners were valued much more higher. It definitely should be that way because the stocks related to the hot commodity definitely has more intrinsic value than the commodity itself. GDX should eventually outperform gold price. The only catch here is that gold miners have a tendency to over promise and under deliver. GDX should be relatively safe because you are investing in a basket of gold miner stocks. If your investing style is aggressive like mine, I would suggest you take a look at NEM(Newmont mining corp) and FCX(Freeport McMoran copper & gold corp). I especially like FCX because its both a gold and a copper play. The price of copper has really taken a hit since the bubble bursted but you have to remember, the commodities bubble is unlike that of a NASDAQ bubble because there is underlying value in commodities. Basically, commodities will definitely bounce hard when the demand comes back. China being the #1 consumer of copper(India #2 I think) and we know they have a bunch of awesome infrastructure projects going on so we better believe that the price of commodities will make a come back.

P.S. Asians are so damn rich
http://bloomberg.com/apps/news?pid=20601083&sid=aJfrsvG7Qw0k&refer=currency

No comments: