CNBC Stock Blog: What factor(s) did HSBC’s Jim Steel recently cite as making precious metals “safe investments”?

“The persistently high price of oil, the weaker dollar and the resurfacing credit crisis are driving up the price of precious metals, making them safe investments,” said Jim Steel, chief commodities analyst for HSBC.

Looks like an “all of the above” to me.

Mining will keep economy growing Need to increase production Prices may fall but demand will be strong

 

THE mining boom will help keep Australia’s economy from falling into a hole until at least 2013, a report suggests.

Economic forecaster BIS Shrapnel said record levels of mining investment together with a ramp-up in production will insulate the economy from recession for the next five years - even with commodity prices tipped to fall.

“We didn’t really do enough investment, with the benefit of hindsight, through the 1990s to gear ourselves up for maintaining strong growth in mineral output and what we’re trying to do now is catch up,” said Adrian Hart, senior manager of BIS Shrapnel’s mining unit.

“The next five years will all be about increasing production to meet demand from China and other emerging economies . . . and once that production comes on stream that will drive weaker prices for a lot of commodities.”

The

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By Jennifer Yousfi Managing Editor Although meat-and-dairy prices are expected to zoom even higher from their current record levels, this slice of the commodities boom won’t be a slam-dunk profit play for investors: Many food producers are watching the revenue gains they’re reaping from the rising market prices get wiped by even bigger spikes in commodity-related expenses. “We are in the early stages of what will become a big mess for producers” of food products, including meat-and-dairy offerings, Greg Wagner, a senior analyst at Ag Resource Co., told the Dow Jones News Service. Over the next few years, retail food prices “will rise like never before” This explosion in prices that’s hitting the U.S. consumer right in the pocketbook is due to spiraling global demand, a nose-diving greenback, soaring energy costs and a big surge in the price of grains that ...

By Martin Hutchinson Contributing Editor U.S. Federal Reserve Chairman Ben S. Bernanke ignored the warnings of most economists last week, and kept the benchmark Federal Funds rate at 2%, far below the actual rate of inflation. As a result of this non-move, investors can probably look forward to having global commodities boom to continue for at least a while longer. Here’s why. Genesis of a Commodities Boom Although the overall commodities boom has been under way for a number of years, prices didn’t just move up in a straight line: There have been long stretches during which prices advanced sharply, followed by short stretches of volatile prices reversals. The latest advance - and certainly one of the most intense - was ignited Sept. 18, which is when the U.S. central bank embarked upon one of the most aggressive rate-cutting campaigns in its history, slashing short-term rates from ...

Source: Mineweb.com  06/17/2008
In its review of global trends of the mining industry, Price WaterhouseCoopers predicts that “2008 will reflect production growth that reflects growing cost pressures.”

“Commodity prices will remain volatile; however, recent significant price rises for bulk commodities will positively impact the bottom line,” according to PwC’s fifth annual review of the global mining industry.

“Consistent with the prior year, the industry leaders will continue to spread out from their geographical homes to operate assets globally,” the PwC global mining team forecast in their report, Mine-As good as it gets?

Price WaterhouseCoopers’ global mining team said diversified global miners fared better last year than gold companies who have experienced the weakest margins.

Emerging market companies have shown especially high growth with these companies now comprising 36% of the Top 40 miners’ market capitalization.

The total market cap of the global mining industry achieved 54% growth as measured by the HSBC …

Commodities are all the rage lately.  How are they doing?  Generally, they are ahead for the year-to-date period. The energy commodity funds are leading the pack. The broad based commodity funds GSG, DJP and DBC, which we reviewed in some detail in a prior article, show middling performance.  The other narrow scope commodity funds are generally doing less well than the broad based funds. On a three-month basis, the narrow scope funds are generally in negative territory. Many of the funds currently have too few assets under management and too little trading volume to warrant investment.

Fortune asks - is it too late to invest in commodities? We’ve touched on this theme many times in the blog [Mar 22: Alert - Commodities are Dead] and my thesis is we’ll have a long term upward move as too many humans want to live like Americans (”World of Shortages”), but it will be punctuated by moves (sometimes viciously) downward from time to time due to various factors. The most common one over the past year is the “strong dollar” myth. Another could be “China will implode post Olympics” or “crude is heading back to $60″ or any number of reasons. Most of it is nonsense; unless the globe goes back to 90% of people living in abject poverty we are headed down this path, one way or the other. And Americans, ill prepared and still in denial, will be competing with …

As the US dollar continues to bounce along at its lowest levels in some time, European manufacturers are eyeing opportunities in the United States. The problem is they are unfamiliar with the odd requirements that American consumers and regulation-happy legislators want. The company that can provide aid and comfort to these groups will be the one to benefit all the way to the bank.

Cross Atlantic Commodities Inc., a manufacturer, marketer and distributor of specialty food products, aides European manufacturers with the subtleties and requirements of entering the American market. The company also manufacturers a waterless car wash and wax product, along with a fruit bar product of its own design under the registered Fruit2 Go product name.

The company has recently embarked upon a new expansion of its European marketing campaign. Under the expanded program, the company has signed an agreement which effectively gives it access to over 4,000 supermarkets and

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“The rise in crude since May 1, from near $112 to the recent high near $139, seems excessive, but wild swings will likely continue for a while longer. Geopolitical tensions alone will cause oil to soar and the latest provides a good example of this. Israel said they will attack Iran if it continues to develop nuclear weapons. Being one of the most explicit threats coming from a government minister, oil took its cue and jumped over $10 in the biggest two day gain in the history of the NYMEX. Iran has repeatedly made it clear that they will not stop their program. Geopolitics will continue to be the wild card during oil’s bull market, but despite these record highs and rising inflation, the global economy is moving along too. It hasn’t really been hurt by the high prices. On the contrary, the global expansion is driving prices higher. …

For mental health reasons, we hardly ever watch CNBC anymore. But glancing at it this afternoon, at one point we saw three separate live graphics displaying the price of crude oil. So much screen space was taken up by live oil trackers, there wasn’t enough space left to show the chart of whatever alternative energy company they were pumping.

Was oil making a new high today? Did the U.S. unilaterally attack another country?  Did someone accidentally double-park in the Strait of Hormuz?  No.

If you feel like it’s been impossible to get away from oil and oil-related stories for too many years to count, that’s because you’re right. The CXO blog has a nice report up on a momentum-based sector investing strategy, and as they explain, the primary reason the strategy massively outperforms the S&P over the

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