Byron Wien, vice chairman of the Blackstone Advisory Partners, just issued his annual Ten Surprises list for 2011 (he has been making this list since 1986).
Wien believes these events are probable, having better than 50 percent chance of happening. However, they are surprises because the average investor only assigns a one out of three chance to them happening and the market has not yet priced them in.
Three of Wiens' calls for 2011 are on commodities.
He thinks gold may soar above $1,600 as investors around the world get the urge to buy something real to hold on to. Rich sovereign wealth funds will be big buyers. Hedge funds will try to short the market because they think the rally is overdone. However, they'll be wrong as gold continues to rise, which will induce some of them to scramble back in the gold market.
Wien thinks corn may rise above $8.0 [per bushel], wheat to $10 [per bushel], and soybeans to $16 [per bushel]. He reasons that rising living standards in the developing world will seriously increase the demand for agricultural commodities. Moreover, these commodities will become a part of more institutional investment portfolios.
Finally, Wien believes oil may rise to $115 per barrel as demand from developing countries continue to increase while supply fails to keep pace. Moreover, he believes gasoline prices will not discourage Americans to drive. Instead, Americans will just by more hybrid vehicles or Congress will initiate conservation measures.
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