Despite the U.S. stock market's recent run up, the decline in the U.S. dollar and inflation fears have investors searching for safety in these uncertain times. A popular strategy that has emerged is to hedge market and currency risk with commodities, namely gold, oil, and uranium. What specific stocks and investments in these sectors are likely to outperform?
ETFs like the US Oil Fund (NYSE: USO) and the SPDR Gold Shares (NYSE: GLD) will obviously track any rise or fall in these commodities to a T, but perhaps individual companies in these sectors are a better fit for you. Below are some industry giants, as well as speculative plays that are also drawing attention from investors.
Gold: Newmont Mining Corp. (NYSE: NEM) is one of the largest gold companies riding the metal's uptrend, doubling off its November 2008 lows, while Eldorado Gold Corp. (AMEX: EGO) is a more speculative name that has already tripled off its lows in the past few months. Since both stocks have run so far so fast, gold will either need to breakout above the key psychological $1,000 barrier or these stocks will lose the momentum they've worked so hard to build.
Oil: Exxon Mobil Corp.'s (NYSE: XOM) and Chevron Corp.'s (NYSE: CVX) businesses might be benefiting from higher oil prices, but their stocks have barely rebounded off its lows, while speculative plays like Brigham Exploration Co. (NASDAQ: BEXP), 72 employees strong, a tiny oil exploration company has already tripled off its $1 per share lows, but is still 80% off its highs so it has room to run.
Uranium: Cameco Corp. (NYSE: CCJ), the world's biggest producer of uranium, has doubled off its lows on increasing commodity prices, while one of the smaller players in the industry, Uranium Resources Inc. (NASDAQ: URRE), has also doubled in price, although it still only trades at $1.50 per share.
Gold, oil, and uranium are uptrending, not necessarily due to demand, but because the overall market environment is ripe for them right now. Where is the top? With such weak global demand, can they build upon, let alone sustain such price increases?
I'd like to be able to quote an expert opinion as to which way the pendulum will swing, but in my research, I've yet to find anyone who has been much more right than they've been wrong. So, I'll leave it as an open-ended question for you to ponder; just know that not all of this sector's stocks are created equal, so you must judge them based on your personal investment goals.
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
