Commodities Rising Forecast the GHF Group

Aug. 18, 2009 - PRLog -- Commodities have just come off a five-year boom. From 2003 to mid-2008, energy prices soared 320 percent in dollar terms, metals and minerals gained 296 percent and foodstuffs rose 138 percent.

Salvadore Padina, an investment strategist and Head of South American Trading for GHF Group, says inflation is unlikely to surge anytime soon.

Inflation Concern

“The spare capacity in the system has tightened and central banks are discussing when to pull back the money they have thrown at the global credit crisis”, he says.

But the huge budget deficits are still creating expectations of inflation, with “hyperinflation” on some lips. That concern alone might be enough to drive up commodity prices, Padina says, for a while, at least. Price pressure will also arise from the growth of developing countries as well as the lack of investment over the past few years in research, exploration or development of proven sites because of the crisis.

Diversification is the best argument for holding some small percentage of your money in commodities -- say, 25 percent. Their prices generally move up when stocks move down and vice versa. Over time, commodities are no more volatile than equities and yield a excellent returns, Mr. Padina says.

“Your investing in tangible things, situations like the Maddoff fiasco don’t happen when you can hold a bar of steel in your hand. Brazil will lead many areas of commodities growth along with China’s consumption.”
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Mr. Padina projected the incredible gains in South American commodities in 2005 when many said that South America was a consistent underperformer to be ignored.

“I am very close to many miners that own operational properties and they are buying some very nice cars right now”, Mr. Padina smiles.

If you buy, do you want an ETF or an ETN? Commodity ETFs invest directly in commodity futures. They are usually structured as interests in a limited partnership.
Precious metals ETFs are trusts that hold the metal itself. When you sell, you are taxed at a maximum rate of 28 percent on long-term gains.

In the short run, some commodities indexes do better than others, depending on what’s hot.
Mr. Padina is calling for a long term rally and is positioning his fund for the eventual recovery. Not everyone is lucky enough to buy this fund. It’s ultra exclusive as you might guess when a funds manager is buddies with the mining operators!

The fund rallied late last year when the other commodity funds fell off a cliff. This year excellent results are expected and for those of you wishing to capture some of this success for yourselves don’t forget to add some tangible commodities to your investment basket!

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