Bangkok Post - 2/4/2006

The closely watched financial website MarketWatch.com said this morning that political and economic uncertainty will drive commodity prices higher in the short term. Look for $70 oil and gold trading at 25-year highs near, or over, $600.

A weekend analysis of the first quarter by MarketWatch writer Myra P. Saefong said that while anything is possible - this is "a market that's been known to trade contrary to fundamental factors" - the likely direction for commodities like crude and gold is to watch the first-quarter gains of mutual funds dedicated to natural resources and precious metals.

Figures from Morningstar Inc showed that precious metals funds rose an average of 17.4% while funds of natural resources added 8.7% for the year through March 29.

Peter Grandich, editor of Grandich Publications has commented that, "It's clearly unfashionable, if not suicidal, to be bearish on oil, but from a contrarian standpoint, it's the only position to be in."

Still, US government data show that crude inventories stand at their highest level since April 1999.

The MarketWatch.com column is at (copy and paste into your browser)

http://tinyurl.com/nff8n

It continued, in part:

Even so, May crude futures closed above $67 a barrel Thursday for the first time in two months with fresh tension between Western countries and Iran over Tehran's nuclear activities fueling the rally.

Prices aren't that far from the front-month futures record of $70.85 a barrel set on Aug. 30 and they're up over $4 so far this year.

Meanwhile, precious-metals prices have climbed to new heights, with gold and silver futures at levels not seen since the early 1980s.

"Gold as well as silver continues to benefit from a robust global growth pattern and consumption of all types of commodities," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.
Gold futures closed Thursday at close to $592 an ounce -- up 12% year to date, and silver futures neared $12 an ounce, up 30% year to date.

Hardly anything could ruin the outlook for the metals - except perhaps world peace, said Thomas Hartmann, an analyst at Altavest Worldwide Trading, who sees higher prices for gold and silver by the end of the second quarter.
Summer weather and tension surrounding Iran remain major factors in the outlook for energy commodities.