Dan Schmeidler

Today in Commodities: Dollar Sets the Tone

Shoot! The above should read: "It appears ...". Sorry.

Today in Commodities: Dollar Sets the Tone

Thank you, Matthew, for your postings. At appears that China (and other economies with massive amounts of U.S. denominated reserves) are currently (the logical) willing buyers of Oil (in exchange for the greenback) at these levels. But these nations have (at least until recently) been mostly dependent on foreign economic growth (a la the "foreign" consumer) in order to spur their own economic growth. And until we see definitive proof that these nations can economically expand on their own, I would not be betting on continued higher commodity prices all across the board.

P.S. Love the new spell-check feature in the comment section. Thank you Seeking Alpha.

Agriculture: Are There Still Bulls in the Supermarket?

Tough call here, but I think it is a good idea to be taking a breather here from the ag group. Oil has dropped significantly, so has gold. POT, for example, reported phenomenal Q-2 results, but it is starting to hit resistance trying to break the $210-220 level. One might think the stock is cheap right now considering the company expects to earn an annual $9.50 - $10.50 EPS. That would give the company a P/E of about 20 at $200 a share. the question is if the market is willing to bid this stock up to let's say P/E 25 ($260 stock price) based on the company's current full year guidance. Maybe, but I think there is also a possibility that fertilizer products such as Potash might experience similar downward price pressures as many other agricultural commodities have recently.

Gold, Oil, Potash and Food: Top Investments This Decade

Also, the markets are seemingly guessing that a bottom reached in the "loosening" interest rate cycle, will soon imply future rate increases, stronger currencies, and lower inflation expectations. Apparently, that is why markets are bidding Gold prices down. I would disagree with this assumption, because it is about as optimistic as one can possibly be about an outcome to our current environment.

Gold, Oil, Potash and Food: Top Investments This Decade

Yes, Gold is falling. Yes, Ag is correcting. The point of the article (which I strongly agree with) is that investing encompasses the purchase of an asset for a future return. The time frame for an investment in volatile times (similar to today's) should be extended even further. Don't look at Gold prices falling (while interest rates are going back down to historic lows) as a trend. It would be absolutely irrational if it was a trend. The more Gold prices are falling in an environment where interest rates are near or nearing all time lows, the more likely it is that a bottom for Gold will soon be found. As far as Ag is concerned: The same. Lower interest rates will drive inflation higher, especially (as proven by recent market prices) on essential or nondiscretionary items. Discretionary inflation is pretty much nonexistent and even deflationary and should therefore allow the Feds to keep the interest rates low for a longer period of time. (This of course, the FOMC will NOT admit to today: They want to create an environment of lower inflation expectations and will therefore probably even hint at rate increases in the near term). If you are looking short term, stay away from Oil, Ag, Gold. Long-term though, a WHOLE different story (see aforementioned $2000 - $200 parity).