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axxell33
02-04-2011, 10:08 AM
While I have been primarily focused on Precious Metals, physical and mining stocks, I believe it would be wise to also look at other long ignored sectors of the commodities market. Tremendous gains have been realized over the last few months with items such as cotton, corn, sugar, etc. Moreover, I would be interested in not only buying US companies, but investing into international companies as a safehaven and diversification out of the USD.

Does anyone have any experience in this area? It's certainly not talked about often and has been widely ignored for years by mainstream. Do you have any resources for reading/learning about choosing companies across these industries? What countries are safe for the commodities?

galtbob
03-04-2011, 03:54 PM
These areas are hot now, and risk of a pullback is high. DO your homework on the fundamentals and wait for a major pullback. Each commodity has its own issues. Nitrogen ties to NatGas prices. CF is the monster player there, or MOS. Potash is about global capacity and multi-year demand. POT is in Canada.. Monsanto was a buy for a while, looks like they are thru government problems. SYN is the European alternative. LNN goes up and down, boring and steady. I like CAT for ag and mining play, but its had a big run from where I bought it at 27.

I would be more inclined to buy producers than consumers. Selling to farmers may be more profitable than distributing food. GROWING food wil be great, if you want to buy some farmland.

nickndfl
03-04-2011, 07:15 PM
RJA & RJI are ETFs.

Moonstruck
03-04-2011, 07:25 PM
If farmers make good money this year. Farm equipment makers like CAT, should do well.

DenariiForMe
03-04-2011, 08:25 PM
I decided to go with MOO, which owns shares of major agriculture-related companies such as Mons, Cat, Pot, Deere, etc. MOO performed almost identically with DBA, a well-diversified Ag futures ETF, until recently. Now I'm noticing the same problem with MOO as with PXE. The futures-ETFs seem to be outperforming the share-ETFs, which are tracking the stock market more than the commodity. But either one should be good. If you want to be more speculative, there's DAG, double-long Ag futures. As others have said, you have to be careful after this much of a run. But my personal opinion is that the markets will melt-up for a little while longer, until the end of QE2 is near, and then correct over the summer, to resume the melt-up once QE3 or QE2lite is announced later in the year. If you get in, have definite stop-out levels decided upon, so you're prepared to buy into the correction.

Take nothing I say as actual investment advice, and always DYODD.

Metal Hoarder
03-04-2011, 09:04 PM
I've been thinking the same thing. Yesterday I rebalanced my lone remaining IRA that has not yet been converted to PM in my possesion.

The oil portion is not very satisfying because it's mostly stocks. Oil jumped today on the Libyan chaos, but these went down, presumably due to being part of the overall stock market decline.

I'm funding a small ($2K) speculation account where I'll be buying call options on CNQ. Canadian crude & natural gas producer. All upside from
Arab chaos, no infrastructure risk.

Was:
SGOL 100% (physical gold (stored in vaults) ETF)

Now:
Oil (37%) (Unfortunately it's partially in stocks):
DIG 25% (2x DJIA U.S. Oil & Gas Index. The fund invests in equity securities and derivatives.)
ERX 12% (3x Russell 1000о Energy Index. The fund invests at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index)

Ag (7%):
JJA 7% (1x The Dow Jones-UBS Agriculture Subindex. The Index is currently composed of seven futures contracts on agricultural commodities traded on U.S. exchanges.)

PM:
PALL 2% (physical palladium (stored in vaults) ETF)
UGL 28% (2x paper gold (futures contracts) ETF)
AGQ 26% (2x paper silver (futures contracts) ETF)

DenariiForMe
03-04-2011, 09:15 PM
Metal Hoarder:

We have very similar ideas about investing these days, I'm wondering why you chose to allocate such a small proportion of your account to agriculture relative energy? Do you see agriculture as more risky, or less upside potential...?

LES301M
03-04-2011, 09:17 PM
I suggest looking at BG and DBA options on the US exchanges, But make sure you hedge your trades. All of the commodities could take a short 'correction' at this point, PM's included.
L

Metal Hoarder
03-04-2011, 10:12 PM
Metal Hoarder:

We have very similar ideas about investing these days, I'm wondering why you chose to allocate such a small proportion of your account to agriculture relative energy? Do you see agriculture as more risky, or less upside potential...?

At the moment I think that oil has an incredible upside potential due to the chaos in north Africa and the Persian Gulf. The Muslim Brotherhood has called for a "Day of Rage" next week in Saudi Arabia. Just a hint of trouble in Saudi will drive a tremendous fear premium into the petro markets. The oil production and transport infrastructure is really, really fragile, therefore at great risk.

Also, the oil companies stand to make massive profits from the unrest-driven price spike, with no further investment, so they have an interest in fomenting, or at least not calming, the unrest. When there's that much money at stake, people do unethical things. Companies with no infrastructure at risk in those countries stand to have less risk, so that's where I'm betting with the speculation account.

So it's a short term heavy weighting to go long oil. The speculation account, with the options on CNQ, will potentially be the major percentage gainer if oil does spike. I'm champing at the bit, waiting for my ACH wire transfer to clear. It's a scam where the money disapears from my credit union checking account on Wednesday, but doesn't show up in the vendor's account until Monday. Somebody gets the float, and I get stuck paying higher prices for options due to the runup in the mean time. I should have paid for a faster transfer service; it would have saved me money by getting in at a better price.

The agricultural play is good too, but it doesn't have the short term potential from the Mideast unrest, IMHO. Once oil stabilizes a bit I'll rebalance again, likely moving a higher percentage into PM and agricultural at that time.

This volatility is presenting some fantastic opportunities. Today the 2x silver fund AGQ went up 7.7%. Unbelievable! I expect that the 2x and 3x oil ETFs will make similar moves as the unrest spreads. We shall see.

nickndfl
03-05-2011, 10:45 AM
I've been thinking the same thing. Yesterday I rebalanced my lone remaining IRA that has not yet been converted to PM in my possesion.

The oil portion is not very satisfying because it's mostly stocks. Oil jumped today on the Libyan chaos, but these went down, presumably due to being part of the overall stock market decline.

I'm funding a small ($2K) speculation account where I'll be buying call options on CNQ. Canadian crude & natural gas producer. All upside from
Arab chaos, no infrastructure risk.

Was:
SGOL 100% (physical gold (stored in vaults) ETF)

Now:
Oil (37%) (Unfortunately it's partially in stocks):
DIG 25% (2x DJIA U.S. Oil & Gas Index. The fund invests in equity securities and derivatives.)
ERX 12% (3x Russell 1000о Energy Index. The fund invests at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index)

Ag (7%):
JJA 7% (1x The Dow Jones-UBS Agriculture Subindex. The Index is currently composed of seven futures contracts on agricultural commodities traded on U.S. exchanges.)

PM:
PALL 2% (physical palladium (stored in vaults) ETF)
UGL 28% (2x paper gold (futures contracts) ETF)
AGQ 26% (2x paper silver (futures contracts) ETF)



That is a real slick portfolio for what has been going on the last several months. If it continues you will be a rich man.

I wonder how much volatility you will be able to handle. I start getting nauseous around (-10%).

Hopefully, it will continue well and I will defintely look very closely at these. I prefer a lower Beta however. I remember the famous quote from Hal Holbrooke to Charlie Sheen in the movie, "Wall Street" just before Sheen's character is about to be arrested for IT.

We really do not know what will happen in the future, but we can position ourselves to capitilize on volatility. That is where the money is made.

Moonstruck
03-05-2011, 11:11 AM
I watched the sunday US Farm Report today. Before the cartoons came on.

I do this for their "world view" on food geopolitics and the indepth weather reporting. Plus they cover equipment trends and the push to GMO foods in north and south America. The flow of food output around the world, from growers to eaters. Is something we should all keep at least 1/2 an eye on.

TPTB useing food production and distribution controls as a weapon. In their bag of tricks is an old and proven method of gameing the system. With the markets being held up POMO and other FED tricks. I am going to stick to metal and energy plays for now.