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XMFSinchiruna (26.54)

China Relights the Torch for Commodities



November 13, 2008 – Comments (10)

Are any other Fools shocked at the lack of follow-through from the markets with respect to recognizing the significance of the Chinese stimulus plan as it relates to commodities?

Here are my thoughts. As always, I want to know yours.

Fool on!


10 Comments – Post Your Own

#1) On November 13, 2008 at 3:10 PM, Tastylunch (28.76) wrote:

I think forced selling in the short term by hedge funds et. al  to meet redemptions isoverwhelming long term fundamentals right now. Not only that confidence in the system has been shaken by the random rule changes (short ban e.g.), some of our most entreprenurial investors who would normally be buying are either in cash or in other vehicles.

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#2) On November 13, 2008 at 3:27 PM, motleyanimal (39.46) wrote:

Slowly I buy, step by step, inch by inch......

I have WHX and LINE, bought recently because of the dividend/distribution and they are hedged against much of the energy price decline. I am more cautious with gold, with GLD and a small speculative stake in NXG and CDE taken at rock bottom prices. UDN (short dollar ETF) is at/near it's 52 week low, so it may be time to pull that trigger.


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#3) On November 13, 2008 at 3:29 PM, XMFSinchiruna (26.54) wrote:


Agreed... but all that may mean is that we inch closer and closer to the most incredible entry points imagineable. I think the wise investor is getting contrarian here and buying up the commodities regardless of how many more hedge funds have yet to fail. 

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#4) On November 13, 2008 at 3:48 PM, GNUBEE (< 20) wrote:

So What's China gonna be buyin? What have they stockpiled?

Anyone have details on this spending plan? I'd like to know what they will need, so I can buy into that. Anyone have access to what was consumed in China's last round of infrastructure spending? I'd like to assume Steel, Coal, and oil, what else will they be buying, and from whom? Australian ore/coal, what else?

What equipment is still purchased vs. Mfg'd? (Cat, Tex)

I really want to know what is on their Shopping list, and what shops they are going to.


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#5) On November 13, 2008 at 3:52 PM, abitare (29.90) wrote:

I would be careful. There is major overcapicity, the WORLD has been on a building and spending spree especially China for its' olymipics. I would consider waiting...

I would rather own commodity producers then other, but there has been a global boom, now bust. I cannot imagine the money is going to rapidly return to the commodity bull. 

I have put a few green thumbs on some gold etc....

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#6) On November 13, 2008 at 4:22 PM, XMFSinchiruna (26.54) wrote:


I think thermal coal is the safest bet, and for that I've offered my top pick for biggest beneficiary in the article: BTU.

BHP, because of the scale of its operation in nearby Australia and the fact that it produces so many items sure to be in their shopping list... I think BHP is a gainer on this.

JOYG has been expanding operations in China, and for its coal-mining equipment gets my nod among the equipment manufacturers. I have no data on how much CAT has sold to China historically, but I was already bullish on CAT before China's annoucement. TEX makes too many other types of things to use as a targeted investment on this news.


$586 billion buys a whole lot of boom. :) I think part of the issue is people have become desensitized to numbers of this magnitude... this is 18% of China's GDP!

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#7) On November 13, 2008 at 5:23 PM, goldminingXpert (28.89) wrote:

the stimulus was a joke. A lot was already announced money, such as disaster relief from 6 months ago. You know better than to trust a communist reporting a number. We have, cough, three percent inflation and a, ehem, working five-year plan.

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#8) On November 13, 2008 at 11:34 PM, Option1307 (30.45) wrote:

Good bless you goldminingXpert, ok ok, kidding.

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#9) On November 14, 2008 at 2:11 PM, guiron (39.05) wrote:

The bailout is mostly to resupply liquidity which has been lost due to the massive amounts of wealth lost to the markets recently. It helped to loosen up credit markets a bit, so things are moving again, but it did nothing so far to really shore up the deeper economic issues. While the bailout is controversial, and Paulson deserved to be kicked for his power play, injecting money into the system is one of the few tools left, and doing nothing is not an option. The concern if we let F and GM go is that, yes, perhaps they deserve it, but that's 2 million jobs lost. That's a big number to be adding to the pile right now. At the very least, the automakers need restructuring badly, and our bailouts don't usually involve firing management and complete government management until the company can get back on its feet like they do in other parts of the world, but perhaps we should consider that. Just throwing money at a failing company with a bad business model won't do anything but push the problem a bit further.

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#10) On November 14, 2008 at 2:12 PM, guiron (39.05) wrote:

Whoops. Posted in the wrong blog ... sorry about that.

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