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It's not every day that you see the gurus of high finance touting a "super-Goldilocks" investment target. But when they do, it's worth taking a close second look.

It was Citigroup which coined the term "super-Goldilocks" to describe the outlook for emerging markets next year. Citigroup says the MSCI Emerging Markets Index will jump 30 percent, to an all-time high in as little as six months.

The Index, which covers twenty-one countries, has already gained 17 percent this year. What drives the hope for a stunning 35 percent gain yet to come?

Super-Goldilocks Investment Target. Fools Gold?

Here's a clue. The Index jumped more than four percent last week as the U.S. revealed its plan to print huge amounts of money. By buying $600 billion worth of its own debt, the U.S. government effectively creates new money. The Federal Reserve hopes this plan will stoke the stagnant U.S. economy.

But the immediate effect has been to boost emerging market stocks and commodity prices.

There are two forces driving this trend. By creating new money, the Federal Reserve effectively devalues the dollar. That means commodities valued in dollars rise as the greenback sinks. The Fed's plan calls for the creation of new dollars until June of next year. That's going to keep the momentum strong for commodity prices.

After the Fed announcement, companies with large commodity holdings enjoyed big gains in stock prices.

Cnooc Ltd. (NYSE:CEO), China's biggest offshore oil explorer, jumped 10 percent. Mining giants BHP Billiton Ltd. (NYSE:BHP) and Rio Tinto Group (RTP) climbed more than five percent. Mitsubishi (OTCPK:MSBHY), which derives more than 40 percent of its sales from energy and mining, gained more than seven percent.

But a boom in raw materials isn't enough to drive a super-Goldilocks surge in emerging markets. Not without real economic growth to drive consumption.

Finding Growth Targets: Clueless?

The Fed's plan to print new money has harsh critics. Germany's Finance Minister calls the Fed's move "clueless", saying it won't revive growth. And Brazil's central bank president says "excess liquidity" in the U.S. economy will create "risks for everyone." He means inflation.

But liquidity is the key to boosting emerging markets. As Citigroup said in its "super-Goldilocks" forecast, "The sub-par recovery in developed economies, with the very low interest rates that go with it, represents an ideal cocktail for emerging market asset prices."

Translation: Poor performance in developed countries makes them a poor target for investment. High liquidity created by the U.S. will drive money to better targets, the emerging markets.

"Super-Goldilocks" may be the most eye-catching term of the past week, but many other investment leaders are on board with the Goldilocks vision. They include Goldman Sachs, Traxis Partners, and Templeton's Mark Mobius, who told Bloomberg he was optimistic about emerging markets for the long term, saying, "I don't see any risks any time soon. These things can last for years and years."

There are a few naysayers.

HSBC warns that the economic recovery in emerging markets is losing some steam. HSBC's chief executive said there were likely to be "some bumps in the road ahead" in developing countries. And Janus Overseas Fund manager Brent Lynn believes emerging markets aren't the buy they once were, and is turning back to developed countries, particularly the U.S.

No doubt there are solid buys in the U.S., as the recent S&P rally demonstrates. But many of the best U.S. performers are multinationals, serving global markets.

Will the Emerging Market Surge Last?

There's more than a river of liquidity driving capital to emerging markets. Strong corporate earnings mean good value in offshore equities.

Emerging market equities do look cheap. The MSCI Emerging Markets Index (ETF: EEM) is valued at only 11.9 times analysts' twelve-month earnings estimates, according to Bloomberg data.

Even if the MSCI Index does rise to the Citigroup forecast level of 1500 next year, the P/E multiple would be far from nosebleed territory. It would have a valuation of just 13 times estimated earnings.

Although some pessimists are warning about an asset bubble caused by too much liquidity, the Citigroup estimate falls far short of bubble territory.

Where to invest? Citigroup favors domestic industries in emerging countries. One choice is Chinese ADRs which have matched the MSCI Emerging Markets Index.

It is possible to buy ETFs which match the entire MSCI Emerging Market Index. But the better strategy might be to pick solid, proven stocks in emerging markets. The best companies should be able to outperform the MSCI index.

An emerging market ETF might be "not too hot" and "not too cold", as Goldilocks would say. But careful buying and selling of stocks in the "super-Goldilocks" arena has the potential to produce results that are just right.

Disclosure: No positions

Source: Emerging Markets as 'Super-Goldilocks' Investments: Hot, Cold or Just Right?