Commodities May Gain 20% by the End of the Third Quarter

According to chief investment officer of U.S. Global Investors Inc. Frank Holmes, commodities may gain 20% by October as infrastructure spending and increased U.S. and Chinese money supplies fuel raw-materials demand.

In an interview today (Tuesday) Holmes said crude oil may gain to between $65 and $75 p/b and copper to $2.25 a pound ($4,960 a metric ton). The U.S. may raise infrastructure spending in the next federal budget, he said, adding to China’s 4 trillion- yuan ($590 billion) stimulus plan and the U.K.’s 9.3 billion pounds ($13.6 billion) of spending for the 2012 Olympics.
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“The odds favor commodities going up 20 percent by the fall because of the sheer number of dollars being printed,” Holmes said…“Fifty percent of all infrastructure spending correlates to oil, and oil is highly correlated to money supply. Money-supply creation is highly correlated to politicians who want to create jobs.” said Holmes. [via Bloomberg]