Commodity Play: Billion Dollar Companies Swallowing Each Other

I own a few shares in a company called Freeport-McMoRan Copper & Gold Inc. (FCX). Monday they announced a bid to buy copper producer Phelps Dodge Corp. (PD) for $25.9 Billion. [yeah thats Billion]. Interestingly enough, as part of the bid FCX will pay $500 million if it backs out while PD will pay $750 million if it bails.

As if that wasn’t exciting enough, yesterday an analyst floated a rumor that BHP Billiton Ltd. (BHP) would shortly announce a bid for FCX!!! Apparently the market liked that idea because prices for FCX and BHP did well. I also own shares of BHP. BHP is involved with oil, gas, copper, silver, zinc, lead, uranium, and copper by-products, including gold, aluminum, coking coal, iron ore, manganese, diamonds and fertilizers.

If you’re wondering why I own stock in BHP & FCX its because I think we’re going to see high inflation in commodity prices and a devaluation of the dollar. [search this blog for “inflation”]. Also read this post on “Hot Commodities”.

Here’s a good post on what the PD acquisition means at The Strategic Investor.

On another note, my dozen shares of PetroChina (PTR) have been doing pretty well. They’re up 10% in the month that I’ve owned them.

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