Breakout

A Surprising Safe Haven Emerging in Commodities Sector

Jeff Macke
Breakout

Never mind what's happening to the price of gold and other industrial metals and materials, Dan Dicker, president of MercBloc and former oil trader, says the price of oil is going to stay strong. In the attached clip, Dicker explains the case why crude oil is a safe bet now and offers a few ideas for how investors can profit.

Crude is the most stable of commodities

Unlike copper, steel and lumber, all of which are dropping in price, Dicker notes that there still isn't any substitute for old school crude oil. It powers everything in our world rather than just construction or other discretionary products. Of course a drop in overall consumption can occur but unless a full scale meltdown of the global economy comes to pass, marginal demand for crude won't disappear.

Oil is "financialized"

Oil is something of a form of currency for financial managers. Unlike gold, which is obviously not as appealing as it was a couple years ago, oil has a function beyond being shiny. With gold's collapse Dicker says institutional investors looking for a place to park money that doesn't rely on the fickle nature of individual investors to drive prices higher have few options beyond crude.

Related: Gold Is Unsafe at Any Price, Says Dicker

If you buy into Dicker's thesis he says the way to play it is to look past the traditional dividend juggernauts like Exxon (XOM) and Chevron (CVX). Instead Dicker suggests going with companies which "can monetize what's going to be a very sticky, very high price of oil over the next couple quarters."

Dicker's going with Exploration and Production (E&P) companies like Anadarko (APC), Apache (APA), Noble Energy (NBL) and EOG Resources (EOG).

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