Weekly Update from Puru

The stealth bull-market continues amidst widespread disbelief and skepticism. Over the past week, market action has been constructive and several technical indicators have recently improved. At present, stocks are consolidating their recent gains and apart from periodic corrections, we expect them to rally over the next 2-3 years.

Yes, the West still faces problems in terms of too much debt and rising foreclosures but the markets seem to have discounted these worries. After the horrendous decline last autumn, most major stock markets have broken out to new recovery highs and this is bullish action. Now, it is conceivable that we may get some jittery pullbacks as we approach the anniversary of last year's crash, but our suggestion is to buy the dips.

My Comments: Yes it is possible that these prices have discounted these things. But a more likely scenario is that we are experiencing the beginning of irrational prices.

We continue to favor the developing markets in Asia and recommend exposure to China, India and Vietnam. All these markets are likely to produce exceptional growth over the medium to long-term.

Over in the energy complex, the price of oil is holding above $70 per barrel and it should rise exponentially over the following decade. The reality is that dwindling supply is facing rising demand and this will translate into much higher prices. Eventually, we will see shortages and oil may only be used for aviation and agriculture. So, in our view, every investor should allocate a meaningful portion of their capital to the upstream oil companies and the energy service companies. If our homework is correct, oil drillers and oil service businesses will make a small fortune over the coming decade.

At current levels, the price of natural gas is extremely cheap and it should rally as soon as industrial demand returns. Accordingly, we suggest that you maintain your exposure to gas producing companies.

Over in the metals department, the price of copper has climbed to a new recovery high ($2.92 per pound) and this is a good sign for the global economy. Other base metals are also rallying hard and they should appreciate further over the following months. Accordingly, we suggest that you keep your positions in diversified mining companies and add more capital on pullbacks.

As far as precious metals are concerned, the action in gold and silver has been as exciting as watching paint dry. It seems as though the lengthy consolidation is in its final phase and we should see a big move over the following months. If the bull-market is still intact (our view), then both gold and silver should break upwards before year-end. So, hold on to your bullion and precious metals mining shares.

My Comments: This is what I was pointing out in my last gold chart update. Price is in a slap fight within this wedge and don't expect to see anything phenomenal until we breakout of it in either direction.

Over in the world of currencies, the US Dollar is coming under pressure against our preferred money - Australian and Canadian dollars. As the commodities bull-market gathers steam, both these currencies should benefit immensely and we remain long-term bulls.

My Comments: Take a look at my last post and chart on the dollar. Its reasonble to see that we are carving out a bottom in it. This is contrary to what Puru is forecasting. In otherwords price is hinting that there is demand for dollars at this price. I would need to see the technicals that I pointed out in the dollar to reverse downward to be fully onboard with him.