The Housing Rebound: Homebuilding Stocks Are Great But Don't Overlook Copper

The homebuilding stocks have been a leader in 2012 on the prospect that housing troubles have bottomed. The SPDR S&P 500 Homebuilder ETF (XHB) is up 46.4% year-to-date. While these stocks are the obvious buy on a housing rebound, such a rebound is a potentially overlooked reason to own copper by the average investor. If housing is indeed picking up again it could serve as a catalyst for the price of copper because the home and office building construction sector uses approximately 40% of the copper in the United States, with direct residential construction constituting approximately two-thirds of the market. There are approximately 195 pounds of copper electrical wire in the average new home constructed in 2010. This does not include the amount of copper wiring that goes into home appliances, plumbing and air-conditioning systems. For months and months we have been hearing about the so-called bottom in housing. If this is the case copper should continue to rise as the housing sector improves. There is some evidence that things are improving. United States homebuilder confidence was up sharply in July, and hit a five-year high in August. In September it ticked even higher to hit the best reading since June 2006. Coupled with increasing property sales in China, a rapidly growing country for housing, I think we could see increased copper demand in the next few quarters. I recommend the following methods right now to play copper...................READ MORE

Yamana Gold Will Shine And I'm Buying The Pullback

Gold and silver have been on a tear since central banks around the globe have been racing to debase their currencies in an effort to increase the money supply. First we had the European Central Bank's announcement of an unlimited bond-buying program. Then Ben Bernanke and the U.S. Federal Reserve announced a massive third round of quantitative easing, aka QE3, consisting of buying $40 billion in mortgage assets monthly until unemployment improves. Even the Bank of Japan announced its own round of easing. I suspect other central banks will follow. Given this climate of endless easing, I believe that gold and precious metals will continue to benefit. This week equities have been pulling back, including gold stocks, on Caterpillar's (CAT) earnings forecast and the turmoil in Europe. Even with the pullback the gold ETFs, IAU and GLD, and the silver ETF, SLV, are still up significantly in the last month, rising 4.3%, 4.4% and 9.8%, respectively. I began pounding the table on the precious metal ETFs as well as gold stocks at the end of July and silver stocks shortly thereafter. I reiterated these buys throughout the month highlighting many companies along the way. The mining company ETFs I recommended in August - GDX, GDXJ, NUGT and SIL - were up 9.1%, 6.5%, 26.7% and 11.8%, respectively, in the last month. For the mid- to long-term investor, existing central bank actions along with global uncertainty has already set the long-term trajectory of precious metal prices upward. I believe that gold and silver miners may outperform the metals over the next year or so as their correlation with the metals return to historical norms. In this article, I want to highlight a gold miner that I am buying on the recent pullback off of the highs. That company is Yamana Gold (AUY).........................READ MORE