Silver is a more attractive investment than gold, the latter of which is showing signs of bubbling, says John Licata, CEO and chief commodity strategist at Blue Phoenix Inc., a commodities-and-metals research company.
While gold may post more gains in 2012, other metals are showing signs of more lasting upswings, such as vanadium or lithium, Licata said in an exclusive Newasmax.TV video interview.
Gold peaked around $1,900 an ounce in September 2011 but has since fallen back to just above $1,600 an ounce as the dollar resumed its traditional role as a safe-haven asset class amid volatility stemming from the European debt crisis.
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"When you go to a supermarket and you start hearing older women talking about buying gold, it starts to make me risk adverse to jump into a sector that has been so substantially motivated in recent years," Licata says.
"We believe that if you are going to play precious metals, we continue to see opportunities within silver. We believe silver is a more intriguing opportunity longer term than gold, and we believe that a lot of momentum players in gold are still out looking to allocate their portfolios to the new commodity metals, the vanadiums of the world, the lithiums, the indiums."
While gold may inch up in 2012, metals like vanadium, which is used in the production of alloys, can shoot up in a pattern resembling a hockey stick, Licata says.
"If you are looking for real alpha, then these are the materials that are going to move forward," Licata says of metals like vanadium.
Betting long on the development of the nuclear sector is a good play as well.
Energy demand will rise in the coming years but natural gas may be a tough play given reticence to drill it via fracking technology.
Coal isn't as clean as its proponents say it is but nuclear is a good option, since the power source can supply baseload electricity that other alternatives like solar or wind energy cannot.
Furthermore smaller nuclear reactors can supply power and alleviate fears often associated with the traditional twin-tower reactors.
And it's clean, too.
"We believe that the time to build nuclear is certainly right now and the fundamentals behind electricity and increased population around the world are right now. So if you are playing China and looking into how they play into this equation as well, they are still moving forward with their reactors. So is India," Licata says.
Russia supplies about half of the U.S. power industry's uranium supply, although it may be looking for clients elsewhere willing to pay more for uranium.
That makes the element a good play either by investing in the companies that mine it or through an exchange-traded fund like URA.
With uranium at about $52.50, "we're still $17 lower than we were post-Fukushima. But we believe that when it comes to the nuclear conversation, the industry has learned lessons and will continue to learn lessons," Licata says.
"When we're talking about an emission-free, carbon-free environment, the nuclear conversation is one that can help bridge our gap before we move to the next technologies, mainly hydrogen. But for now, we think that the nuclear conversation is on the country cannot afford to move away from."
Furthermore, electric vehicles are going to take off as well, which makes investing in electricity even further attractive.
Much needs to be done in order to invest in the electric-vehicle technology, including ways to charge them and how to adapt computer technology into them.
But the demand will be there, says Licata, who recently test drove a Nissan Leaf.
"It was really, really very compatible to a regular fuel-powered car. I think that as consumers we are more willing to embrace change. I think that we're going to see this option grow by leaps and bounds."
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