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"Base Metals - The Other Side of the Coin with Paul van Eeden"
Last week I directed Kitco readers to an interview with Lawrence Roulston, which we filmed at the Cambridge House Investment Conference recently held in Toronto.
During that interview, Lawrence countered the argument of the “base metal bears” who believe that a recession is right around the corner and, because of that, demand for base metals will go down. Obviously, the bears say, when the demand goes down the associated public companies will suffer and investors will experience losses.
Lawrence and I both feel that, even if economies around the world slow down, the demand for base metals will remain strong enough to maintain the current price levels in this resource sector.
Paul van Eeden disagrees and I must say that his argument is not one to immediately dismiss.
In segments one and two of our radio show last weekend, Paul outlined why he believes that this is the case. He pointed out that the U.S. stock markets are at high levels and I said that indicates to me that a recession is not in the offing.
He brought up the fact that it is possible that the numbers that are reflected in the Dow Jones Industrial Average, the Standard and Poor’s Index, the Nasdaq Composite and the other indicators could be misleading. They would be inaccurate, as compared to the comparable numbers of a few years back, if the money supply was significantly greater today than it was at that time, In fact, the economic strength that they indicate today is really not there.
He maintains that this is the case.
If you agree, and believe that economic hard times are right around the corner, that I would say that you should not be investing in base metals and should be concentrating only in the area of precious metals.
As you our listeners know, I have been touting the opportunities that I believe exist in the arena of base metals for some time now. Paul’s argument against that is certainly plausible and I intend to research his theory.
I would like to know where you stand on this issue. You can let me know by responding to alkorelin@comcast.net.
If you missed our show last weekend, it is available at our website which is (www.kereport.com). If you go there and click on the segments devoted to Paul, you can hear his argument.
A.B. Korelin
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Al Korelin is the host of the internationally syndicated Korelin Economics Report. This radio program deals with asset based investing. Guests appearing on the program provide independent opinions based on their research. If Mr. Korelin or any of the guests have a financial interest in any of the companies which they discuss, that fact is clearly disclosed to listeners
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