This article was originally sent to TickerTrax subscribers on December 16th, 2010.
With only two weeks left in the year and another week of tax loss selling, now is a good time to review emerging themes for 2011. These can influence everything from penny stocks to blue chips.
I track 50 of the world’s best strategists and money managers to gauge the pulse of the market and where we may be headed both short and long term. It’s impossible to discuss everything … so here is a quick and dirty review of certain things to monitor.
1) David Kostin with Goldman Sachs was one of the most accurate U.S. strategists in 2010. Almost a year ago he called for S&P 500 at 1,250 the end of 2010. December 15th it closed at 1235. For 2011 he is calling for a 17 percent rally in the S&P 500 with a target of 1,450. Eleven strategists surveyed by Bloomberg forecast 11 percent but Kostin says it will do much better thanks to strong corporate earnings and balance sheets. Goldman Sachs research estimates U.S. companies are sitting on more than $1 trillion in cash.
2) Another brilliant (and very accurate) mind is Laszlo Biriny of Biriny Associates who forecasts the S&P 500 at a more conservative 1,333 – 7.9 percent higher one year from now. Biriny was one of the few big names who nailed the March 2009 low right on the head. For 2011 he sees strong balance sheets and the best corporate earnings growth (37 percent) since 1988.
3) On the oil front, Ian Taylor of Vitol, the world’s largest independent energy trader, sees oil realistically in the $70 to $85 a barrel range for 2011. If demand surprises to the upside from China or India next year, then this could push the commodity closer to $100 per barrel – although it may be short lived.
4) Thermal coal is emerging as a strong play for 2011 and the optimistic forecast is similar to what we saw for 2010. They site the fact that China shifted from a net exporter to the world’s second largest importer, after Japan, in just three years. The boom in demand from China, which comes amid a clampdown on illegal and unsafe mining in the country and strong electricity demand, is likely to transform Beijing into the world’s largest importer, accounting for 15 per cent of the market in 2011. Coking coal will also remain in high demand as the Chinese steel industry continues growing.
5) Evy Hambro of Blackrock in London is one of the world’s most successful resource fund managers – and has been for the past decade. He believes the positive trend for gold will remain intact (although he does not set targets) and believes industrial metals copper and iron ore will outperform again. He says that China is being under-estimated for 2011 and supply constraints will push prices even higher.
THOM CALANDRA: Thanks Danny. Nice review. I always appreciate big-picture thinking … because I rarely do anything except look at individual properties, people and prospectors. I’ve been spending some time in Nevada looking at some of the people and projects that rate attention. Gold Standard Ventures (TSX: V.GV, Stock Forum) and Golden PhoenixMinerals (OTC:BB: GPXM, Stock Forum) were among them. Please see the coverage. I’ll be looking also at properties in Mexico and revisiting situations in Colombia and in Africa in coming months. I also hope to get out to see Trueclaim Exploration’s (TSX: V.TRM, Stock Forum) Scadding Gold Project in Ontario at some point … and Golden Phoenix’s interests in the (I am told) sizzling hot Shining Tree District, also in Ontario, not too far from Sudbury. Naturally, I’ll have to wear snow shoes. In addition, I am interested in pursuing projects with scandium, tantalum, tellurium, iron ore and other lesser-known metals that figure in the production of 21st century devices, high-heat pipelines and solar panels, etc. On the molybdenum front, CFO A J Ali of Avanti Mining (TSX: V.AVT, Stock Forum) says we can expect the Kitsault Mine feasibility study this week. I own shares of this former Planetary Prospect and as stated expect a report that will show a thick net present value for the British Columbia Mine … as much as $700 million. I will not be selling Avanti shares at any level lower than 70 cents Canadian, or double their present level. On the actionable front, I continue to see interest build in Nevada prospectors. I also congratulate Swedish gold producer Gold-Ore (TSX: T.GOZ, Stock Forum) on its fresh profit report and its recent share rise to 90 cents Canadian. We visited the Bjorkdal Mine in September. Finally, I think investors might keep an eye out for relative value calculations when researching prospectors in our beloved Colombia. Companies with valuations that seem large given their gains this autumn are a flake of gold when thrown on the pile of the world’s 20 largest gold (and silver and copper) producers. – Thom Calandra
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