Sunday, January 25, 2009

Weekly Commodities Review: Is Gold Breaking Out?


Gold Breaking Out?

Adam Hewison of INO.com believes the gold market is getting wound up, ready to explode higher (check out his free video here). Long time readers know that I believe gold is heading much higher, because inflation is heading much higher.

Inflation is already through the roof - it's just that we are not yet experiencing the effects of this newly printed money, because the velocity of money has dropped off so sharply.

Not that this has been any consolation to my wife - who I "protected" last July by shifting her entire 401K into gold stocks. I may have hit the exact top in gold stocks.

I think Bernanke is fighting the wrong battle. As a student of the Great Depression, he's working to prevent deflation at all costs. And in the end, I think he'll be successful - and bring us a true inflationary nightmare.


Rangebound Grains

A pretty quiet week in the grains, after last week's excitement (nausea). We continue to hold our corn and soybean positions, and are waiting for the market to tell us what to do next.



Cotton Rallies Late

A BIG Friday for cotton! The "Pakistan Observer" reports that cotton rallied on news a major merchant took out significant amounts of cotton from the exchange - hey, it's on the internet, so it must be true.

While demand for cotton is taking it on the chin, cotton supply seems to be taking an even harder fall. The Commodity Research Bureau projects that global cotton output will fall 7.4%, which outpaces the 6.1% year over year fall in global cotton consumption the USDA is projecting.


A Socialist Plea

Earlier this week, I felt compelled to step up to the plate and defend free market capitalism, after receiving this socialist plea from our local utility company.

What do you think - did I take it too far? Not far enough? You decide, Komrade!

Open positions

Date Position Qty Month/Yr Contract Entry Price Last Price Profit/Loss
01/16/09 Long 1 MAR 09 Corn 374 3/4 390 1/4 $775.00
01/20/09 Long 1 MAR 09 Corn 397 1/2 390 1/4 ($362.50)
12/31/08 Long 1 MAR 09 Cotton 48.52 50.55 $1,015.00
01/13/09 Long 1 MAR 09 Mini Soybeans 987 1/4 1006 $187.50
01/13/09 Long 1 MAR 09 Mini Soybeans 989 1/4 1006 $167.50
Net Profit/Loss On Open Positions $1,782.50

Account Balances

Current Cash Balance $39,223.08
Open Trade Equity $1,782.50
Total Equity $41,005.58
Long Option Value $0.00
Short Option Value $0.00
Net Liquidating Value $41,005.58
---------------------------------------------
Cashed out: $20,000.00
Total value: $61,005.58
Weekly return: 0.6%
2009 YTD return: -19.3%

Prior year's results:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial stake: $2,000.00

(Had to add these historical facts in to keep me from smashing my head into my keyboard).

***"Cash out" mostly means taxes, living expenses, and startup capital for our time management software company that was recently covered by the Sacramento Business Journal and Inc magazine.

3 comments:

huh? said...

Brett...this is a question that i have always wanted to ask, do you ever trade options, and also how do you determine your exit and sntry points?

Brett Owens said...

Sure - I don't trade options through my own account, but I do through a managed account I have. Have a broker there who knows what he's doing - he calls me up when he likes a trade, and I give him the go/no go. Always found options too confusing to trade on my own, never took the time to really dig into them.

I typically enter on 20-day highs, exit on 15-day lows. Flip that around if I'm going short.

This entry/exit strategy worked beautifully when commodes were rallying non-stop, and not so beautiful during these false starts.

huh? said...

Haaa...I see the light!!

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