Skip to main content

Forget Gold;Buy Aluminium!

Almost half the world population tracks Gold price which has been hovering around $800 to $1000 during this economic crisis and has done very well as a protection against downside risk. During same duration, Aluminium has gone down from over $3000 per tonne to $1400 for 60% loss. This is expected since nobody buys Aluminium has hedge against protection and has co-relation with overall economic activity. That's where my investing idea comes in.

Now that economy is just coming out of severe downturn, there are small signs of recession ending and growth resuming. With growth would come factories starting and car demand picking up. Since Aluminium is being used in many industries, it is natural that demand for it would pick up and along with that price. I am expecting it to go above $2000 in 12-18 months. How does one invest in Aluminium. 

Here are my suggestions:

  • Alcoa (AA) - one of the biggest Aluminium player. It is good buy at $10-$10.50
  • Sterlite (SLT) -  Major Aluminium and copper player in India $13 to $14
  • Aluminium Corporation of China (ACH) - major player in China at $22-$25
  • Century Aluminium (CENX) - This is my stock of week recommendation at buy price of $6 with target price of $9 in 12 months. This is one of the speciality aluminium player. It's stock price collapsed due to liquidity concerns and is still down nearly 85% from its peak. When metal prices recover, it should benefit and even though it will not reach its all time high ever, it could give significant returns. Similar to my earlier recommendations, it is "survival" play and investors willing to bet on "survival" premise can gain significantly
So gold is for jewellery - it looks good as jewellery (but does not beautify portfolio)
Go for some real metal and add some muscle to your portfolio !

Good luck and have a good week

/Shyam

Comments

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...

Elections and Rotations!

2024 will be known as an important year in terms of elections (97 nations covering half the population) across the major countries in the world. We are only halfway thru the year and already some key nations have gone thru elections and voters have indicated their preference for change (in a way). Let's take a look at few. India - Modi's BJP started with lots of enthusiasm with slogans of "Modi ki Guarantee" and "400 paar" (more than 400) seats (out of 543). Indian voters (which I considered one of the most smartest) gave reality check to Modi and BJP by reducing BJP count to 240 (from 303 in previous parliament) forcing it to form coalition government. I have lot more detailed hypothesis on these results (but not here). Almost everyone (including me) got their predictions wrong and lost some friendly bets. Indians want balance between "Strong, Prosperous, Proud" India with "Inclusive, Employment and Harmony". Modi and BJP are quick learn...

And the Oscar goes to...

It's Oscar Sunday and time for predictions for few categories - before I digress into talking about drama in DC or markets.  First of all, I want to recognize the damage LA fires have done to the beloved areas of Los Angeles and impacted families across all spectrums. My heart goes out to them and wish them recovery and rebuilding of their lives... This year's Oscar nominees and post nomination period had been interesting to say the least. Due to this, the field is wide open in almost all categories and that's what makes prediction game so interesting. Just to set expectations, I would consider a win if I get even 50% predictions correct given the dynamics of nominees this year. So here are my predictions - "And the Oscar goes to..." Best Picture - Anora (surprise could be "The Brutalist") Best Director - Sean Baker for "Anora" (Surprise could be Brady Corbet for "The Brutalist") Best Actor - Adrien Brody for "The Brutalist"...