Commodities: The Best Is Yet to Come

Sometimes we feel like evangelists. Preaching passionate and fiery sermons, attempting to convert the unbelievers into the path of profitable trading.

Blood alone moves history. - Martin Luther

Today, we stand our ground and state our case. The prospects for commodities keep on getting better!

Don't let the "deflationists" seduce you with their wanton words, tempting statistics, and wicked ways. Can you not feel and see with your own two eyes the evidence to support higher commodity prices? To wit:

• Rising spread between in inflation protected vs. non protected treasuries,
• Multi-week highs in spot commodity markets,
• Multi-week highs in the Baltic Dry Index,
• Bullish breakouts of Gold in non USD terms and an impending multi-week high of gold in Aussie dollar terms,
• Multi-week highs in our own “proprietary” commodity index (an index of coal, rubber, pulp, wool, and polyethylene).

Spread between US 10 Yr and US 10 Yr TIP

CRB Spot All Commodities Index

Baltic Dry Index

Gold in AUDs

Proprietary Commodity Index

Every man must do two things alone; he must do his own believing and his own dying. - Martin Luther.

The choice to believe is something that you and you alone must make yourself. We can but lead you along the righteous path. Once you accept what the markets are telling you into your heart, then you can start to trade with conviction.

Verily I say, there is a great "commodity storm" upon the horizon. The time for positioning is nigh. If you’re positioned sufficiently then truly:

The best is yet to be. - John Wesley

Disclosure: Long DBC, SLV.

Comments

[Mad Hedge F...:]

pls With December wheat (WZ09) tickling $5.78 a few weeks ago, the e-mails are now pouring in from farmers, co-ops, and silo managers in the Great Plains states offering reasons why it should go higher. The Northern states and much of the Midwest west have now endured a couple of cycles of heavy rains followed by punishing freezes. With much of the crop now being brought in wet, it has to be dried by burning large amounts of natural gas to keep it from rotting, delaying shipping. The intemperate weather is pushing back the double planting of new crops. Railroad managers tell me that extra cars are being booked by the hundreds to ship wheat to the West coast ports to accommodate larger than expected Chinese buying. The harvest in the Ukraine is coming in seven million metric tonnes less than expected, which will force some Eastern European nations to come here to buy. My bet that weather would not continue perfect is paying off big time. How hard was that? I also predicted that the September $4.40 bottom would be put in by cash strapped small farmers desperate to unload at any price in order to finance seed and chemicals for the next crop (click here for the report). Traders who took my advice now have the luxurious choice of cashing in their three week, 25% profit (175% if you did it through the futures) and running, or rolling over to a longer dated contract to catch the bigger trend.

Nov 03 11:13 AM

[prairiedog555:]

I live in rural Kansas and the report about the wet weather is correct. And also true that the use of energy to dry the grain is evident as you can hear and smell the drying being done by farmers and grain silos.

Nov 03 11:51 AM

[Mad Hedge F...:]

vhu You’ve got to hand it to Warren Buffett, who never does anything half heartedly. The stunning news that he is paying $44 billion for the 73.4% of Burlington Northern Sante Fe (BNI) he doesn’t already own, a 30% premium, had punch drunk traders picking themselves off of the floor. The other rails rocketed, like Union Pacific (UNP), CSX (CSX), and Kansas City Southern (KCSR). The deal is the Oracle of Omaha’s largest in his career, and took the BNI board all of 15 minutes to approve. For me this deal speaks volumes about the long term trends in the US economy as seen by its greatest investor. It screams Commodities! Commodities! Commodities! Rails can only prosper moving bulk freight from the heartland to ports on the three coasts, which foreigners are buying in ever larger quantities at ever higher prices. It also says the coal industry isn’t going anywhere soon, as it accounts for 70% of all rail traffic. Buffet let loose of some fascinating statistics about the enormous productivity increases the industry has accomplished. In the last 25 years, it cut employment from 500,000 to 175,000, while increasing freight by 60% and reducing track by 40%, and now accounts for 40% of the total goods moved in the country. Railroads are the greenest transportation out there, a ton of freight requiring only a gallon of fuel to move 470 miles. When I was growing up, my big goal in life was to become a train engineer. Maybe it’s time for me to revisit that aspiration. And I promise not to text while driving!

Nov 03 07:49 PM

[Gary A:]

Have fun now because Bill Gross is right. It is all overvalued, by 15 Trillion dollars! The Goldman crony crook play of course is long oil and short reits.

BTW, the war is on. Buy commodities and walk away from your credit cards. That is the real play that will bring all this "reflation" back into line: hubpages.com/hub/The-R...

Nov 03 09:31 PM

[rick12345:]

Having worked in the Auction industry before, you come to understand buyers very quickly. Their basic premise is always the same - to buy something valuable for next to nothing. To them everything is overvalued until they wish to sell it, at which point it suddenly becomes undervalued. The stock market in my opinion is much the same. Unfortunately, due to greed most of the time they end up paying more than they planned too.
Ergo, I can almost guarantee that 80% of the commenter's on Seeking Alpha do not have a single cent invested in physical stock; These people of course are better known as "bears".

Nov 05 04:46 AM