NEW YORK (Real Money) -- Eureka! I found the perfect security for this moment. The stock that can do it all for you. Either side, bull or bear!
Yep, here's a highly leveraged play on oil, copper and gold with a 5.44% yield that is at the vortex of pretty much everything that's going wrong in the world right now.
Back in December of 2012, with copper -- as represented by the iPath DJ-UBS Copper SubTR (JJC) exchange-traded note -- trading at $46, and with gold holding steady at $1,694 per ounce, Freeport chose to diversify away from those two metals. It bought Plains Exploration & Production in a $16.3 billion transaction to create "a premier U.S. based natural resource company with an industry leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile," to quote the release from the day the deal was announced.
It was a shrewd move to diversify from copper and gold as they were just about to hit the skids. Unfortunately, Freeport diversified into oil when Brent was at $109 and West Texas was at $86.
For a while it looked real smart. But now it's in a world of hurt. The stock is down almost 40% and, judging by the supply demand considerations for what it produces, I would think that this one has further to fall.
However, if you think that the fortunes of the world can turn, if you think that oil's about to bottom, or that gold is stabilizing and that China's about to get much better, I don't know if you can dream up a security as precisely terrific as this one.
Think about it. Plains has huge offshore assets, just the kind of assets that are horrendous at low oil prices but can be amazing at high ones. The reserves here are gigantic. I think that's unquestioned. Copper's down huge from its high, and Freeport has the world's best product. How low and out of favor can gold stay if the world's printing even more money than during the Great Recession?