The S&P metals and mining index has soared more than 300 percent over the past year, compared to the energy index, which is up about 20 percent. So which is the better sector for investors going forward? Dan Denbow, portfolio manager at USAA Precious Metals & Minerals Fund, and Jerry Castellini, president and chief investment officer of CastleArk Management, discussed their views.
“There’s no better play, as a U.S. investor in the worldwide economy, than in energy,” Castellini told CNBC.
“It’s the simple building block of economic growth in Asia and BRICs.”*
Castellini said oil and gas development is a good area to invest and added that energy has a good forward growth outlook.
“There’s more demand today, next year, 5 to 10 years for both metals and energy,” he said. “You’re going to see driving supply and demand fundamentals pushing these stocks and growing these earnings over time.”
In the meantime, Denbow said he is bullish on metals—especially the precious metals.
“I don’t think metals are overvalued,” he said. “We have a lot of impacts out there that will help the precious metals, especially gold over the long term.”
Denbow said inflation pressures will continue to build over the long-term, which will benefit gold.
“[Gold prices] will definitely go up because the cost of production goes up, and as that happens, you will have to have a higher price to create more gold,” he said.
* BRICs: Emerging markets, i.e., Brazil, Russia, India, China.
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Castellini owns PBR and RRC in his funds.
GOLD and RGLD are both part of Denbow’s USAGX fund.