If I Were a Betting Man

Virtually the only stocks that are going up in this market are gold stocks. Not even the large oil and gas stocks are going up anymore, even with the price of a barrel of oil recently hitting a new record high.

You know that when gold is strong and nothing else is, there’s a major confidence problem in the marketplace.

One of the best gold companies on the planet is Goldcorp, Inc. (NYSE/GG), which has most of its operations located in the Western hemisphere. This stock has more than doubled since last September, moving commensurately with the spot price of gold.

One of the reasons why this stock is doing so well is that all of its production is 100% unhedged. Every $100.00 price increase in an ounce of gold represents enormous profitability for the company. Gold, of course, is also a hedge against a declining U.S. dollar.

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Because the current state of the equity market is very weak, it is difficult to read much into the current trading action of most industry sectors. I am beginning to think, however, that the lack of strength in oil and gas stocks is a signal of the market’s turning of enthusiasm for this sector. I think most investors now believe that the recent price strength in oil and run its course for the short term.

So, the continuing strong areas of the investing landscape continue to be commodities.

The price of food is going to get more expensive because the commodity price cycle is now entering the agricultural sector. If we get a very dry growing season this year, we just might see agricultural commodity prices soar.

If I were a betting man right now, I’d say fertilizer stocks would be very worthy of consideration.