Time for the 'Commodities Contrarian Contango' with Precious Metals and Energy

Gold and Silver have had an amazing run since last December, and even more impressive have been miners like Agnico-Eagle (NYSE:AEM), Goldcorp (NYSE:GG) and Barrick Gold (NYSE:ABX).

My favorite mid-size gold miner, IAM Gold (NYSE:IAG) has virtually quadrupled off its low last November and almost doubled in the past 5 months. It's been a feverish frenzy, an overdue bubble that might be ready to burst.

On March 8th I tried to provoke the gods of Wall Street to create a huge stock market rally by conjuring up the term "Contrarian Contango" as a new term for paradoxically pretending you think the markets are going to keep going down when you sense they are about to go up. It worked beyond my expectations.

So now I will create a commodities-based potient called the "Commodities Contrarian Contango" by throwing out the outlandish notion that precious metals, oil and natural gas are going straight up from this point till the Spring of 2010.

In this fantastic proposal, I see the Silver ETF (NYSE:SLV) racing up to $20 a share, the Gold ETF (NYSE:GLD) breaking through the $120 mark and the Central Fund of Canada (NYSE:CEF) going straight up to $15 a share without skipping a beat.

Why it wouldn't amaze me if the United States Oil ETF (NYSE:USO) keeps on rising to around $50 a share, and the United States Natural Gas ETF (NYSE:UNG) surprises everyone and hits $35 a share by December. How about the share price of Exxon Mobil Corp. (NYSE:XOM)? It's going straight up to $80 between now and the end of the year.

Why am I making such an absurd group of predictions? Because I'm one of those fools who doesn't want to buy anymore of those great commodities, companies or names until we have an untimely correction. With my predictive track record (even a broken clock is right twice a day, and I was spot-on once, on March 8th, 2009) if I write that some investments are bound to keep shooting higher and higher it means a correction is imminent.

Just in case my "Commodities Contrarian Contango" backfires and we find gold, silver, oil and natural gas doing a moon-shot from current levels, I'm going to hold on to what's left of my portfolio, not to mention the "physical stuff" I've accumulated in depositories over the past 10 years.

But for those of us who want to buy more SLV, GLD, CEF, UNG, USO, USL, and DBO, not to mention more ABX, GG, AEM, KGC, GDX, SLW, SSRI, PAAS and my little darling IAG, let's hope I've aroused and angered the Commodity gods on Mount Arrogance and they drive prices lower starting real, real soon.

Disclosure: I still own SLV, CEF, USL, GLD and IAG.

Comments

[Larry House:]

Patient can be hard for investors/traders, but it can work wonders. This is a great time to do nothing for a while and just watch. Value investors have always stressed wait for the fat pitch, the one you can't miss. Commodities need to settle out for a while.

May 14 02:17 PM

[Donald Ingram:]

Marc - I think you are not to far off the "Mark"! Please excuse the bad pun. However your basic premise still holds true. Anything to do with precious metals, energy, agriculture and commodities in general is a good place to be. They are all poised to go, with the exception of the dollar. It's steepening downward spiral will be the starting signal.

May 14 03:02 PM

[Henrique Si...:]

Good article, Marc.

I am short oil and I have been posting my real time trading decisions in my blog.

Basically and in a simplistic way, I am short because underlying conditions will prevail. Oil will trade back down to the low fifities in a jifty.

May 14 06:31 PM

[Marc Courtenay:]

Thank you Larry, Donald and Henrique for your comments. I'm hoping my "C.C.Contango" helps to make things happen in the right direction and that we all have a good entry point soon.

May 14 07:02 PM

[silverwood:]

Marc, all your proposed pricings are very plausible considering we have embarked on the Zimbabwe style monetary policies. In the mean- time all the market managers are working overtime to create the smokescreen.

May 15 12:53 AM

[rick12345:]

It really isn't all that difficult. If manufacturing activity goes up, commodities go up. A weak dollar, while good for export, isn't favorable to our asian buddies because ultimately it means americans will be spending less. The upside, of course, is that it mantains inflationary pressure. Expect to pay more for your flat screen television.

May 15 03:30 AM

[DONE_SONZ:]

How lame.The list goes on and on for what stocks and sectors have bounced alot of the bottom.Absolute trash.

May 15 08:49 AM

[Marc Courtenay:]

Freya, Silverwood, Rick and Done...Thanks for taking the time to give your comments, thoughts and reactions. How about a little feedback on your specific investment plans. That would be appreciated.

May 15 02:53 PM

[dieuwer:]

↓

May 15 08:53 PM

[Missing_Link:]

I'm not sure I understand this article; I'm not sure whether you're being sarcastic, being sarcastic about being sarcastic, or simply telling the truth. The article goes into a lot about how you made a call on March 8 that, according to you, actually drove the market in the opposite direction, and now you plan to change the market's direction again using reverse psychology.

I can't tell if you're trying to be funny or not. In any event, it seems like childish nonsense, and I'm disappointed that there's no reference to fundamentals here.

May 16 12:18 PM

[Marc Courtenay:]

Well, at least I made you stop and think, and I'm sincerely appreciative of your comment. It was a spoof, or a paradoxical way of saying that, although I'm not sure if we will see a commodities correction between now and November, I'm sure hoping for one. I also attempted to find a unique way to make the point that we all should be hedged both directions since no one knows for sure. There are plenty of articles on the "fundamentals". I wanted to focus on preparing for the uncertainties. My March 8th article was another of my lame attempts to use humor and irony to point out that we should expect a turnaround in the plunging markets at that time. I sensed it was coming soon (a bear market rally), but it came right away and I lucked out there. That's the "missing link" :)


On May 16 12:18 PM Missing_Link wrote:

> I'm not sure I understand this article; I'm not sure whether you're
> being sarcastic, being sarcastic about being sarcastic, or simply
> telling the truth. The article goes into a lot about how you made
> a call on March 8 that, according to you, actually drove the market
> in the opposite direction, and now you plan to change the market's
> direction again using reverse psychology.
>
> I can't tell if you're trying to be funny or not. In any event,
> it seems like childish nonsense, and I'm disappointed that there's
> no reference to fundamentals here.

May 17 03:42 PM

[one eye:]

Freya may have qualms about calling a "spade a spade", I don't.

Marc Courteney: You are an outright Scam artist Bull Craping the readers with your Posts. You post an Article, people read and believe if your responses sound plausible.

Not only that, If the Junk you print comes through, you claim responsibility for a good call.

Your March 8th Article, the One which was also a Spoof? But gave you followers because it worked?

Where was your Announcement That it was a Joke?

What other Articles have worked By Accident not design?

Whenever I see another Article of yours, I will bring forward this Article and your Admission of this and other "Spoofs" or "Lame Attempts" at humor.

Printing Material that you know is Untrue but pretending it is. Your Ego at being able to get away with it for So long finally caught up with you.

You Really are Brain Dead.

May 23 03:55 PM

[harammph:]

Freya/one eye: this guy has to be stopped.

There are enough jerks in the World without having one invite himself into your home.

May 24 12:11 AM