HAI

Unless otherwise indicated, the material below has not been prepared by Van Eck Associates Corporation or HardAssetsInvestor.com.
Neither assumes any liability for any content on a third party website or material prepared by a third party.

Brad's Desktop

  
Poor Nothing special Worth watching Pretty cool Awesome! 19 Ratings
Rate this article
Prediction Vindicated: 50% More For Coal
Written by Brad Zigler   
Tuesday, 26 February 2008 12:39
Just three weeks ago, Macquarie Bank economist Richard Gibbs was quoted here calling for thermal coal prices to rise more than 50% in the coming contract year (see "Coal: The New Black Gold").

South African state utility Eskom has obliged Gibbs by contracting for more than 34 million metric tons of domestic grade and run-of-mine coal at 100 rand or more, a rate 50% higher than previously paid.

"Coal is the new gold," said Gibbs three weeks ago. That was no hyperbole. Gibbs, in fact, underestimated the upside potential for the black stuff. Spot prices for Central Appalachian coal rose nearly 41% in the first three weeks of February alone, while gold bullion eked out a gain of barely more than 1%.

The Central Appalachian market came into 2008 with a tight supply picture. Prices have been pushed higher because of increasing demand, declining production and higher costs.

Coal is used to produce 40% of the world's electricity. Supply disruptions have forced China, South Africa and India to cut back exports to meet domestic needs. And there's still not enough of the stuff to go ‘round.

Calls for even more price inflation could carry black gold to an even higher plateau by year's end.

Maybe it won't be so bad to get a lump of coal in my holiday stocking.

Avg Weekly Coal Commodity Spot Prices End Feb 22 '08

Source: U.S. Department of Energy

 

More on this topic (What's this?)
The Five Best Ways to Invest in Gold Today
Noise & The 10 Best Days
When Is The Time To Buy Gold Stocks?
Read more on Coal Power, Investing In Gold at Wikinvest
 
Subscribe to Our Weekly Newsletter 
First Comment

Comments (0)



Post a Comment

Comment
(Limit 2,000
characters) 
*
Name: *
E-mail: *
Home page:

(optional)

Type in the displayed characters
*
Email follow-up comments to my e-mail address
 


Terms of Use
The HardAssetsInvestor.com message board and comment features are designed to facilitate thoughtful discussion of the biggest issues impacting commodity investors. All comments should be respectful. Insults and profanity are not permitted. The editor reserves the right to remove comments at his/her discretion.

Commodities Data

January 06, 2009 12:30 AM EDT

Gold Monthly OHLC
  Loading data ...
 

Weekly Commodities Poll

Given the recent events in the stock markets, should investors increase or decrease their commodities allocations, or leave their portfolios alone?
 

Seminal Papers »