Index Universe’s Inside Commodities conference took place in Chicago this week, and we were lucky enough to get passes to hear the likes of Dennis Gartman and Peter Schiff share their insights on the commodity world. Amid some heated panels and healthy debates, there were a number of important points made, and significant takeaways that all commodity investors should hear. Below, we outline five of the most important points made, or most significant takeaways from the conference [for more commodity news and analysis subscribe to our free newsletter].
- Ethanol and The Election: One of the biggest talking points for both the agricultural and energy panels surrounded ethanol and its future, particularly if Mitt Romney wins the upcoming election. Many panelists expressed their worries for ethanol prices, as Romney will end the ethanol mandate that has been put in place by Obama, which will hit corn hard. What’s more, the panelists did not seem to think that this had been priced in yet, as many feel that the incumbent will be able to overcome the former Massachusetts Governor. Should Romney win, keep your eye on both corn and ethanol.
- Coal, Coal, Coal: Throughout multiple panels, we heard various experts weigh in why they liked coal. Denis Gartman was one of the first to point out that coal’s use has been so low given depressed natural gas prices, but as NG continues to rise, he feels that coal presents an enticing long position. He was followed by a number of different industry experts who cited similar reasoning for the benefits of coal, with some adding in that should Romney win the election, coal use will see a nice boost and could be a good play for 2013 [see also Three Commodities Dividend Lovers Must Own].
- Fire surrounding Natural Gas: Speaking of natural gas, the most heated panel of the day was that on energy. It is very clear that the investing world stands incredibly divided on where NG is heading in the future, and so were some of the panelists. A bull case was made given its current low prices, technological advancements with fracking, and a need to ween ourselves off of crude oil. On the other side of that, many felt that NG would see a decline in the short to medium term because of how cheap and abundant coal is, reigniting the discussion over coal and its potential.
- Gold Shines Bright: Though many things were debated and contested throughout the day, one asset remained the clear winner; gold. It seemed that the precious metal worked its way into nearly every discussion, as the panelists each had their own reasoning for why gold will continue to rise on a nominal basis. Some cited currency debasement, others cited general fear in the market, and still others looked at central bank buying habits as their reasoning for remaining bullish on the yellow metal. In fact, there were few negative things said about gold as this asset seemed to be the one universally loved investment of the day.
Disclosure: No positions at time of writing.