Resource “Trophies” are Headed Higher in 2012

The resource “trophies” of the world are starting 2012 in a much different position than they did 2011…
 
Longtime DailyWealth readers are familiar with our concept of resource “trophies”… giant, world-class deposits of resources like crude oil, iron ore, uranium, copper, gold, and fertilizer. These trophies are owned by the world’s elite resource firms, including Freeport-McMoRan (copper), Cameco (uranium), and Goldcorp (gold). Our general rule of thumb is, when “trophies” go on a fire sale, you want to load up on shares.
 
#-ad_banner-#In late 2010, most trophy stocks enjoyed a huge rally. They climbed 50%-100% in response to the Federal Reserve’s massive “E-Z-Credit” goosing of the economy. This boom left them plenty “overbought” at the start of 2011. As is typical with the volatile resource sector, these stocks busted when folks fled riskier assets. This brings us to an interesting start to 2012…
 
The chart below displays the past two years of trading in iron ore trophy Vale. Vale is the world’s biggest and best collection of iron ore assets. As you can see, Vale enjoyed the big late-2010 boom… and lost more than 33% of its value during the bust. (Many other trophy stocks sport similar charts.) A trader can buy a handful of these trophies, set tight protective stop losses near their 52-week lows, and bet on a potential resource rally in the coming months.