HardAssetsInvestor

Mike Norman, anchor, HardAssetsInvestor.com (Norman): Hello everybody. And welcome back to HardAssetsInvestor.com. I’m Mike Norman, your host. And here for the second part of our interview is my guest Daniel Cronin, who is the chief metals and oil analyst for PitGuru.com.

Now in the last discussion we had, we talked about gold; you’re bullish on gold. It’s a breakout. There are some important players in the market now; guys who have been right in other things in the past in a big way, and they’re back in.

Daniel Cronin, chief metals & oil analyst, PitGuru.com (Cronin): Right.

Norman: All right, let’s talk about some of the other metals. You are the chief metals analyst for Pit Guru; what about copper, what about silver?

Cronin: I think definitely silver right now. It’s kind of actually lagging behind gold. Because silver’s high in ’08 was around $21-22, and gold was at $1,030. And now gold is only about $10 below and silver is relatively cheap now: $4 trading at $17.

Norman: So is that a better opportunity, you think?

Cronin: I think that is actually kind of a better opportunity if you want to try and invest in the silver market. Because I think that gives you a little bit more of the upside. And I know the all-time high is $50. I don’t know …

Norman: Way back; that was back in 1980 with the Hunt fiasco.

Cronin: Right. So I don’t know if we’re going to test any of those levels. But I think silver can try and push through the $20 mark.

Norman: All right. So silver looks like the better opportunity; looks like it could play catch-up to what gold’s been doing up until now.

Cronin: Outperform a little more than gold, yes.

Norman: Now copper’s always interesting to me as an economist, because it’s sort of an economically sensitive metal. We see it coming back. It’s about just under $3, I think. Now is this telling us maybe that the global economy is in a recovery phase, or is it another one of these just … speculators and investors want to own this?

Cronin: Right. I think it’s actually a definite correlation with how the U.S. economy is trying to recover from the credit crisis, the housing crisis. Because copper is one of those commodities where it’s intertwined definitely with the industrial production and also the housing markets. Because obviously copper is a big player in production of houses. And if we start to see that kind of bottom in home prices and home indexes and start to kind of move to the top, I think we can obviously see that breaking the $3 mark, going up to maybe $3.5-4.00 in the next six to 12 months.

Norman: Now we got up to … I believe we were in the $4 range, what, about a year ago?

Cronin: Yes. We were up there. That’s when everybody didn’t think anything could go wrong. And then we had the commodity kind of bust here, and copper came all the way down from $4.25 ...

Norman: Were you surprised when all these things came down to the extent that they did? I mean, because we had such a huge run-up in everything. And, like you said, everyone thought, “Well, nothing can go wrong. This is the new paradigm. You’ve got to own commodities. They’re going to go straight up.” But the correction, the downward reaction in some of these materials was brutal. It erased everything that it had gained in the prior four, five years.

Cronin: Oh, absolutely. I mean copper … a lot of people got the information early, in, say, the beginning of the summer months. And everybody was saying “How low can we really go?” And then copper goes down from $4 to $3, and then, well, is it really going to get down $2? And then we go to $2. And then you start seeing the inflow of selling coming in, just people getting out of positions. And it went all the way down to $1.25. And I think oil … from $147 all the way down to $35. I mean, investors … I don’t know if they really kind of grasp how big of a momentum swing and a change that was from $147 to …