Hyperinflation

Commodity Forecast for 2010, 2011

Agree 100%, SLW is my largest equity position. I Prefer Franco-Nevada due to superior growth ( 3 acquisitions this year and 1 potentially transformational acquisition, which franco-has recently resorted to a hostile takeover of international royalty company). This will add key projects such as a 3.5% NSR on Pascua-Lama and several others. Franco will be a superior cash flow generator in my opinion, but royal gold is a close second.


On Dec 15 07:55 PM mythoughts wrote:

>

Commodity Forecast for 2010, 2011

I have futures contracts on the CBOT, LME, ASX, NYLIFFE and ICE. As for equities I don't hold a single U.S stock barring options in which I own DXD calls. My current allocation is about 50% Canada ( due to all the miners, oil trusts, agriculture and Canadian oil sands, 20% in Australia ( again mining, agriculture and some oil and gas), 20% China and Brazil, and 10% Europe and the UK. Any monthly profits that are realized, are used to purchase the physical commodities ( which are stored in 3 different countries) The gains over the last year, especially in silver have been used to purchase the physical commodity. I'm currently at about 40% physical metals 50% stock and futures and 10% cash. In other words i agree with you, but want to maintain some leverage so that I can purchase them basically free by using realized profits to do so. Futures by the way are "obligations to purchase a given commodity" so in a way that is buying a physical commodity even if it with a dead currency.


On Dec 15 09:22 AM Jordan Lindsey wrote:

> Are you purchasing these commodities with a failed currency? Do you
> only own the physical? If not what is the point?

Commodity Forecast for 2010, 2011

Which rare earth metals catch your eye? The only one I am familiar with is Rhodium


On Dec 15 08:49 AM Tekton wrote:

> Expectedly, one commodity group, essential to all electronics and
> high tech economies, is off the the radar. It is remarkable that
> the impending shortage of the new precious metals of the 21st Century,
> Rare Earth Elements, has scarcely been mentioned in any venues but
> mining. If there is one commodity group that will see unprecedented
> expansion in the next 5 years, it will be in this space.

Commodity Forecast for 2010, 2011

RJI is a good way to play commodities, but the fact they don't give you any leverage is of concern. If you are futures, I would suggest that approach, or mini futures for those new to commodity trading. A mini-silver contract for example controls 1,000 oz of silver ( compared to a normal future which controls 5,000 oz). This means that in the worse case scenario you could lose 17,200 should silver go to 0 ( though this is impossible). Wheat on the other hand is currently trading around 5.63/bushel ( for the April contract). This also gives you control over 1,000 bushels of wheat, but $5,630 is the maximum loss ( though wheat is not going to zero either). In other words, incorporating futures as a part a portfolio will increase your returns due to the leverage involved. Even if one or two mini futures can greatly enhance total return. On the option front, I would buy DBS (double silver options) , DBC ( double commodity options) or go on the LSE and buy levered wheat ETF's. Of course there is always the equity markets, which have numerous gold and silver miners, oil and natural gas stocks and corn and wheat companies ( though to a lesser degree).
My personal favorite gold, silver, oil, and agriculture stocks are:
Jaguar Mining - (JAG)
Kirkland Lake (KGILF.PK)
Royal Gold - (RGLD)
Franco-Nevada (FNNVF.PK)
Silver Wheaton (SLW)
Couer d'alene mines (CDE)
Silver Standard resources (SSRI)
Silvercorp (SVM)
Talisman (TLM)
New Zealand Oil & Gas (NZO.AX)
Penn-Growth (PGH)
PennWest (PWE)
Suncor (SU)
Canadian Oil Sands (COSWF.PK)
Viterra (VT.TSX)
China Blue Chem - on Hong Kong Exchange
Potash - (POT)

There is always the gold miners ETF (GDX) and silver and junior gold miners (GDXJ) and various ETF's for other other commodities i.e (OIH)


On Dec 15 01:56 PM J Moayyad wrote:

> So what is the best way to play commodities for the next few years?
> Individual stocks/companies often have performances that are less
> than the actual commodity itself. ETFs like DBA have complicated
> K-1s, not to mention the expenses incurred when they turn over their
> future contracts. ETNs like RJA have the default risk of the underlying
> entity. There does not seem to be a good way to play commodities.
> Suggestions?

Commodity Forecast for 2010, 2011

I completely agree but with a few exceptions, especially concerning the precious metals. In the even of another financial crisis or "asset price deflation", I still don't expect silver to drop below $15 nor gold cross the $1000 mark. I think it will be far different from the sell off seen last Nov, in that the dollar will not rally to nearly the degree. Enormous inflation has been created over this short 1 year period ( Inflation as it used to be known - "unnecessary increase in the supply of money and credit." I think this will be especially true if the debt ceiling is raised to 14 trillion this week, the healthcare bills are passed, additional stimulus packages ( which Obama is talking about now), or debt purchases by the fed ( direction injection of inflation into the system). This would more than wipe out any deflationary forces and more But it is nearly impossible to forecast such an event.


On Dec 14 08:10 AM doubleguns wrote:

> The only fly in the ointment would be a collapse of the dollar trade
> that would put your predictions on hold for some period of time.
> I do not know if that would be for a 3 month period or a 9 month
> period or more, but it would only be a speed bump in the road that
> you have laid out.
>
> I think it needs mentioned however so for those who missed the train
> this would be the event that would give you a chance to get aboard
> this train at the very, very last stop.
>
> You would not want to be left standing on that platform watching
> the train leave the last stop for many years.

Commodity Forecast for 2010, 2011

Prudent forecasting is always best, but I don't see how it will be possible for crude not to surpass $200 barrel by 2016. Oil is one of the first commodities to rise when inflation expectations pick up, but it also rises much faster than inflation. I think $200/barrel could be surpassed if we merely have the inflationary pressures seen in the late 70's/early 80's. If I had to make my own index it would look something like this

Silver - 23%
Wheat - 21%
Crude - 20%
Corn - 10%
Natural Gas - 8%
Gold - 6%
Cotton - 5%
Sugar - 4%
Palladium - 3%

Agriculture - 40%
Oil & Gas - 28%
Precious Metals - 32%

On Dec 14 06:21 PM Road Runner wrote:

> >2010

Commodity Forecast for 2010, 2011

Timing is an issue in any forecast, but what can you do.

Investment in Commodities for the Coming Decade

Go to yahoo finance, type in DBA in the ticker box and Powershares double agriculture ETF will show up. The investment seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.
the top 10 holdings (which add up to 107%) clearly show this is a double agriculture ETF.
Company Symbol % Assets - Top 10 Holdings
CORN FUTURE MAR 10 N/A 7.2
CORN FUTURES DEC 09 N/A 11.03
RED WHEAT FUT MGE JUL10 N/A 4.88
SOYBEAN FUTURE JAN10 N/A 7.76
SOYBEAN FUTURE NOV 09 N/A 14.31
Soybean Meal (Fut) N/A 1.74
SOYBEAN OIL FUTR DEC09 N/A 2.86
SUGAR #11(WORLD) JUL10 N/A 42.36
WHEAT FUTURE(CBT) JUL10 N/A 5.98
WHEAT FUTURE(KCB) JUL10 N/A 6.12


On Dec 10 11:54 AM Maverick707 wrote:

> Sir just a minor correction. The DB in "DBA" does not stand for "double."
> This is not a leveraged ETF. It stands for Deutsche Bank, the index
> on which the agriculture fund is based.

Investment in Commodities for the Coming Decade

if you adjust the market and price in terms of gold, oil or silver, it has actually gone down. If you use the USDX, which is hovering around 75 currently, the dow should be adjusted downward 15-16%. The dollar decline fueled somewhere between 1200-1500 points in the dow this year.


On Dec 09 08:20 PM MIT_daytrad3r wrote:

> All this market does is go up day after day , week after week, month
> after month
>
> good articles; financeopinionss.blogs...

Investment in Commodities for the Coming Decade

FUND SUMMARY
The investment seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index - Optimum Yield Agriculture Excess Return. The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.
FUND OPERATIONS
DBA Category Avg.
Total Expense Ratio 0.75% N/A
Annual Holdings Turnover 0% 0
Total Net Assets 2.33B 177.55M

Company Symbol % Assets - Top 10 Holdings
CORN FUTURE MAR 10 N/A 7.2
CORN FUTURES DEC 09 N/A 11.03
RED WHEAT FUT MGE JUL10 N/A 4.88
SOYBEAN FUTURE JAN10 N/A 7.76
SOYBEAN FUTURE NOV 09 N/A 14.31
Soybean Meal (Fut) N/A 1.74
SOYBEAN OIL FUTR DEC09 N/A 2.86
SUGAR #11(WORLD) JUL10 N/A 42.36
WHEAT FUTURE(CBT) JUL10 N/A 5.98
WHEAT FUTURE(KCB) JUL10 N/A 6.12

Investment in Commodities for the Coming Decade

Even with the potential ROY acquisition, Gold will continue to make up a larger portion of Franco's total royalty revenue. Though Voisey's bay is talked about for the reason of this aquisition, I think it has more to due with the 3.5% NSR on Barricks Pascua-Lama mine (expected to come online in 2013). Franco also receives approx 15% of their royalty revenues from oil and gas, which along with some exposure to base metals and platinum, provides franco with a more attractive portfolio (IMO). Franco's has a higher growth profile ( especially with potential delays at Andocalla, which makes up over 30% of RGLD's NAV) , more diversified royalty portfolio ( which equates to less mining risk as they don't rely as heavily on any given stream), more free cash flow generation ( which will likely lead them to increase their payout ratio at a faster rate going forward), and currently sporting a much cheaper valuation
( possibly due to the fact franco only trades on the TSX and the pink sheets)

On Dec 09 08:22 AM texpat wrote:

> Franco-Nevada isn't just a play on gold royalties. It also has energy
> royalties and now, with its offer to acquire ROY (IRC.TO), will also
> have base metal royalties. I completely agree that it, along with
> RGLD and SLW, make great core holdings. They're about the closest
> thing to blue-chips that you can find in what is a very volatile
> sector.

Investment in Commodities for the Coming Decade

Whenever you buy an ETF composed of futures, there has to be a high expense ratio due to the interest costs of holding the contract. It is fairly hard to find pure plays on wheat, making etfs and futures the ideal vehicle.


On Dec 09 08:23 AM LaChic wrote:

> dba has been in a trading range for sometime now, meanwhile that
> etf fee is a killer if this thing dont break sooner than later.

Bargains Still Abound in a Few Gold Miners

I agree with Marc Faber when he said gold will never see triple digits again...


On Dec 03 01:33 AM investor-G.man wrote:

> AGT-apollo gold, near and long term growth as long as the price of
> gold stays above $980

Bargains Still Abound in a Few Gold Miners

Clint007,
I agree that Rubicon has a very bright future indeed, but I think it is more likely it will be part of another miners future as I can see multiple bids coming in 2010. In my opinion, the only way to stay independent is for Rubicon's shareholders to reject whatever bid is made ( though it will likely be at a 200-400% premium to the current market price, which is hard to have > 50% reject).


On Nov 23 11:15 AM Clint007 wrote:

> For me, the best "FUTURE" Gold producer is Rubicon Minerals.
> On its way to over 5 Million Onces and this is only in a tiny part
> of Rubicon Claims (F2 Zone). Plus a possible target from Goldcorp;
> and the more RMX/RBY found more Gold, more higher the buying price
> it will be!

Bargains Still Abound in a Few Gold Miners

Franco-Nevada, Silver Wheaton & Royal Gold are mining companies ( well royalty companies to be precise) that will have extremely high FCF yields as the bull market in precious metals kicks into full gear. They require no ongoing capital requirements (Except Silver Wheaton due to the Pascua-Lama purchase from Barrick earlier this year). Silver Wheaton has already talked about paying out a dividend in the near future while Franco and Royal Gold have increased their dividends for the coming year. I have written about these dynamic companies several times:
Franco-Nevada:
seekingalpha.com/artic...
Silver Wheaton:
seekingalpha.com/artic...


On Nov 23 01:32 PM Genesis wrote:

> Why not research it yourself?