Safe-haven buying is lifting gold to historic highs that are likely to
have staying power. Industrial commodity prospects are slowly turning the
corner due to sharp supply cuts, and aggressive fiscal and monetary
policy interventions, says Bart Melek, BMO's Global Commodity Strategist
HOLLYWOOD, FL, Feb. 20 /CNW/ - Join Bart Melek, Global Commodity
Strategist, BMO Capital Markets, by conference call for an update on his
outlook for the global commodities sector.
Speaking from BMO's Global Metals and Mining Conference in Hollywood,
Fla., Mr. Melek will provide a brief commentary and then take questions on
Monday February 23, 2009 at 11: 30 a.m. (EST).
BMO provides its outlook for the Global Commodities Sector
Media conference call with Bart Melek, Global Commodity Strategist,
BMO Capital Markets
Monday, February 23, 2009
11:30 a.m. (EST)
Conference Call Number:
Toronto Local: 416-641-6139
North-American Toll-Free: 866-299-6657
Global Toll-Free: 800-6578-9898
Mr. Melek will discuss:
- A Perfect Storm Brewing for Gold
Gold has had a seven-year bull run. BMO expects gold to be a strong
performer for at least the next three years. The US$185/oz rally since
mid-January to around US$990/oz suggests that the good times for gold
will continue in 2009. The price of the metal surged despite a
strengthened U.S. dollar and ebbing inflation. There appears to be
traditional flight-to-quality buying as investors seek the safety of
However, there is a risk that prices may correct somewhat in the near-
term if there is a return to relative stability in the financial
market, particularly the financial sector.
The current and longer-term optimism regarding precious metals is
primarily driven by the view that the U.S. dollar will weaken in the
future and that inflation pressures will grow as central banks and
governments pursue very aggressive stimulative policies, including
zero interest rates, quantitative easing and massive project spending.
Massive future U.S. and other government bond issues and developing
world high karat jewellery buying are also supportive of gold.
Silver Regaining Its Luster
Similar to gold, silver has had a very good seven years. BMO expects
gold to be a strong performer for at least the next three years, with
silver following suit and perhaps even outperforming gold. Somewhat
better-than-expected supply/demand conditions and investor interest in
the metal as a safe haven asset are the key reasons driving this view.
- Credit led commodity sell-off has left metal prices too low, long-term
prospects remain upbeat
The global recession, evolving credit crisis, growing inventories and
general fear-based selling has driven down the price of both metals
and bulk commodities considerably. However, with the price of many
metals far below their cost of production and financing difficult to
obtain, producers are cutting current and future production. The
supply outlook is therefore relatively restrained.
Aggressive monetary policy actions by the Fed, the PBoC and others
should eventually help credit creation activity. The credit freeze was
a very significant factor behind the sharpest and deepest commodity
price correction seen in recent months.
Strong government stimulative efforts around the world, all of which
seem to be directed towards infrastructure projects and personal
spending, are likely to start turning demand around in the latter part
of 2009. BMO expects that this will bolster resource consumption in
the near-term. Recent declines in manufactured goods , iron ore and
metallurgical coal inventories in China and other Asian nations is
evidence that things may be looking up for commodity prices.
In the long run, the development of emerging economies and structural
rigidities in the mining world are expected to keep supply lines
tight. As such, metal markets continue to have a robust long-term
Full copies of Mr. Melek's latest reports on his "Global Commodity
Strategy", "Gold Outlook" and "Silver Outlook" are available upon request.
One-on-one interviews with Mr. Melek will also be available.
Bart Melek has closely analyzed trends in global commodity and financial
markets, as well as in the global and Canadian economies, for more than a
decade. He contributes to BMO Capital Markets' strategic view by providing
commentary on commodity markets and how they relate to the sectoral and
For further information:
For further information: Media Contacts: Orli Namian, Toronto,
firstname.lastname@example.org, (416) 867-3996; Holly Holt, New York, email@example.com,
(212) 885-4153; Internet: www.bmocm.com