Pinnacle Activity Ticker
Real Interest Rate: Negative Rates will Turn Commodities Positive
Pinnacle Digest writes: It has finally become a rare occurence to find commodity-bulls in this market. After the first half of 2012, we can see why. Frank Holmes has just returned from FreedomFest in Vegas and continues to preach natural resource allocation (citing many trends).
Although only 4 commodities rose in the first half of 2012, Holmes believes the stage is set for higher commodity prices, stronger growth and inflation in the coming months.
Jeremy Grantham of GMO is a huge commodities bull and believes "the great paradigm shift" is occurring and will have a dramatic impact on how we invest in commodities, change opportunities and adjust for risk.
Holmes believes that tremendous population growth, changes in government policies, development of new technologies and urbanization trends will all work to benefit the natural resource markets. It is explained that this is why diversification, among natural resources, is vital.
In a negative real interest rate environment, such as the one we are in today, investors have to be proactive in getting their cash working for them.
Holmes suggests dividend-paying resource stocks. Of the companies in the S&P 500 Index, materials pay an average yield of 2.3 percent, utilities pay an annual rate of 4.1 percent, and energy stocks pay a dividend yield of 2.2 percent.