Thursday, March 18, 2010

Coal Prices Set to Rally??


For most of the past 50 years, since the birth of environmental awareness, coal has been the "black sheep" of the power-production family. Now, thanks to more efficient furnaces, better exhaust-scrubbing systems and other technological advances, coal is regaining favor in the world's energy markets.

However, the biggest factor in coal's recent price surge is steadily increasing demand for the fossil fuel in power generation and steel-making process, abetted by rising costs for other types of fuel, like oil and natural gas.

The question for investors, of course, is will this rising demand continue - and how can you profit if it does?

The answer to the first part of that question is almost certainly, "yes," but solving the second part is a little trickier
.

And the bottom line:

Coal prices could suffer a mild seasonal decline as winter comes to
an end, but the ballooning long-term demand picture and increasing oil prices appear poised to provide support - and possibly light a new fire under coal-related stocks in the near future.


Frankly, nothing works in support of the coal industry and in opposition to the environmentalists (and fair weather friends) quite as much as a demand spike.

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