OJO Zafado

Who's to Blame for the Commodities Boom?

The author recognises ,"had the government not increased the deficit by cutting taxes and increasing spending" the Laffer Curve turning into "Killer Bend" resulting Ben the Dollar slayer panicing at the wheel, driving the bus off the road and over the cliff. No one invested in hard assets has been hit as hard as those with out this diversification in their portfolios. I am doing quite well in GDX,DBA,RJI,DXKSX,PFBD... and being over weight in O&G with IEO,PXE,and a slew of Canroys. If only I had not taken the 40% gain in GACHF and 35% gain in FDG. Selling GACHF at $2 turned out to be not too shrewd! But now I am getting excited about SXRZF. The Stan with out the Oliver.

Who's to Blame for the Commodities Boom?

Observation on Canroy valuations may be true. What no one seems to be realizing is that there is a dual tax change going on here. At the same time the tax status changes the 15% with holding will be eliminated. Also these investments will become much more attractive to investors in tax sheltered accounts who are currently paying a foriegn tax for which they can get no Foreign Tax Credit. They will under the curent tax treaty be exempt from Canadian taxes on their investment. The Canadian Nat Gas market is key now to establishing a direct link in Nat Gas prices to crude. As long as oil stays above $100/BBL the development of the tarsands will accelerate. This process is expensive as it is alot like ethanol. Tremendous Nat Gas amounts are used to extract the oil. This has already resulted in exports of gas to the US in being curbed. AAV and BTE remain the "best" in terms of capitalization. Both are most vulnerable to vultures swooping in and paying a 15-20% premium. PVX & PWE remain the most under valued. PGH is nearly all Nat Gas so that still has legs. The timber trusts CFPUF,TWTUF and ATBUF have all seemed to bottom after lumber futures made a Quad bottom. It is perhaps a little early but not too early to dip a toe. ATBUF perhaps the smallest but +40% owned by BAM is converting to a REIT and will realize (IMHO) a 40% gain in 18 months.