Three Key Themes for 2013

 | Dec 27, 2012 | 6:30 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

eog

,

gg

,

abx

,

nem

Three trends that weren't supposed to happen in 2013: a strong euro, weak oil and positive gold. These three trends have to be explored, because they are pretty difficult to fathom but must be fathomed if we are to understand 2013.

First, the euro. We all know that the euro was supposed to be kaput by now, replaced by the deutsche mark, franc, lira and everything else, with the deutsche mark starting the trend. This was a total misread of history and of the denouement of World War II. There's no way that we could ever understand the depth of fear of another war or the guilt the Germans feel. They are simply not going to let this happen. We focused only on the economics of it, not the politics, and the richer countries are willing to lose money endlessly on Greece if that's what it takes, because Spain, Italy and Ireland are coming back, as is the European stock market. The bankers and hedge funds in this country are way too smart for their own good, because they know the numbers but not the history. The euro could go higher still, because I sense that no one large owns it.

Oil is a function of supply. It is beginning to dawn on people that the statistics for the U.S. are far more robust than what the numbers and predictions indicate. Every month, numbers coming out of Texas and North Dakota are much better than people expect. Endless upside surprises, and yet most of the big interests aren't even drilling there yet. The major oils are slow of foot and let the independents in while they focused on unstable areas such as West Africa and Indonesia, both of which will perhaps be ... confiscated by poor countries that mistakenly gave them rights. The whole federal-lands thing is a big sideshow.

There's talk that natural gas will tighten because of the lack of drilling, but Mark Papa, the best wildcatter there is and the CEO of EOG Resources (EOG), says there's no demand for the stuff, and very few plants are being built to use it. Plus all of the power plants that can convert have already done so. If we could harness natural gas as a surface fuel, I have no doubt that gasoline would be at $2.50 rather fast, but the administration would despise that, because it would encourage fossil fuel use. We are the reason why oil is not going higher. If Iran joined the Council of Nations, oil would go to $75, but it won't, so take that off the table.

Finally, gold, is now finishing up 6% for the year despite predictions that this, the 12th straight up year, would bring the long-expected crash. Gold is the opposite of oil. There's just not enough of it. Go over the quarters of Goldcorp (GG), Agnico-Eagle Mines (AEM), Newmont Mining (NEM) and Barrick Gold (ABX). The costs are astronomical, the finds pitiful and, like oil, the only countries where confiscation isn't an issue are in North America. Everything else is dicey.

In 2013 it will be even harder to find, so gold, I believe, will have still one more up year.

Gold is endlessly described as a hedge against inflation, or a hedge against chaos, or a hedge against deflation, or a hedge against central bank reflation. Gold is a story of the worldwide middle class trying to get its hands on some precious metals to become and feel rich. There's not enough gold being found. Period. End of story. 

Columnist Conversations

GS has cleared the important hurdle on the way up which increases the odds for an eventual rally towards the 1...
A good quarterly report has sent shares of Calamos Asset Management (CLMS) sharply higher. CLMS was up about ...
Electronics distributor Ingram Micro (IM) reported better than 16% growth in its Q3 sending the stock up about...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.