Latest Stock Market Outlook from Jim Rogers, Marc Faber, Richard Russell & More!

With the markets looking as turbulent as they've been in the past 15+ months, the financial gurus are out in full force. We've got links below to the latest commentary from our favorites - Jim Rogers, Marc Faber, Richard Russell, Bob Prechter, and more.

Also below are links to important investment trends that you should be keeping an eye on!

Richard Russell: Expect Downside Action in Stocks
If the May 7 lows are violated, look out below!

Why We Shorted the S&P 500 This Week
An update on our latest trade

Robert Prechter: These Technical Indicators Have Me Worried
These 8 "rarely" line up on the same side of the trade

Marc Faber's Outlook on China
There's a crash coming!

David Rosenberg's Latest on the Money Supply
What inflation? Wake me up in a few years.


Excellent Economic Outlook Analysis for US
David Galland Separates Economic Fact From Fiction


Gold Vending Machines in Abu Dhabi
More signs of a top!


Deflation is Alive and Well
So says the US dollar

The Outlook for Crude Oil
What do the technical indicators reveal?

Jim Rogers' Latest Thoughts on Euro and European Bailouts
Why he'd look at silver right now, too

Latest CPI Numbers
Still no inflation to be seen

Germany to Ban Naked Short Selling
Revealing charts on how that worked out for US, Australia

Marc Faber's 3 Favorite Commodity Picks
These picks may be tracing out a "historic low"

Doug Casey on Investing Opportunities in Cattle

What's the cheapest commodity on the board right now? It's probably a toss up between cattle and natural gas. Both are beyond beaten down; both are at near historic lows; both are just cheap.

That doesn't mean they can't get cheaper. But if you're looking to make some big bucks in commodities, it's usually wise to find something really cheap to buy (which is safer than finding something expensive to short, since your downside is limited).

Doug Casey's been on the cattle beat for a while - so long, in fact, that he started his own herd! Though I doubt most readers have the means (or energy) to take steps like that, I found his insights on cattle very interesting. Here's a guy who's bearish on nearly everything...so when he turns bullish on something, it must be for a good reason.

Enjoy Doug's guest piece!

Doug Casey on Cattle (Interviewed by Louis James, International Speculator) L: Doug, we talk a lot about metals and energy, but you’ve also made money in agriculture, as have our subscribers who got in early on corn and potash. In the February 2008 issue of the International Speculator, you made the case for speculating on rising cattle prices. Would you explain your rationale for that and give us an update? Doug: Sure. There is such a thing as a cattle cycle, and right now, all over the world, cattle are in liquidation. Farmers and ranchers just can’t make any money on cattle. Nobody has made any money on cattle in North America or Europe for years, and it’s especially serious now. So worldwide, cattle herds are being slaughtered, and that’s depressing the prices. The interesting thing is that even as prices are being depressed by all the selling, counter-intuitively, cattle herds are collapsing. That means the number of cattle and the price of cattle are going down at the same time. That obviously can’t go on forever; at some point, the relative number of cattle is going to be quite small, and prices are going to explode upwards. Why? Because people in China, the rest of the Orient, and across the developing world are going to want more beef -- in addition to the traditional consumers. And the numbers of cattle are going to be very low. I think that cattle is an excellent place to be. L: If it’s not a traditional part of their diet, why would such people want more beef? Doug: As you are becoming wealthier, you want better-quality food. Beef is generally at the top of the food chain. Why is that? It takes about two pounds of grain to produce a pound of chicken meat; four pounds of grain to get a pound of pork; seven pounds for a pound of beef. So from a production point of view, beef has always been, and I guess will always be, the most expensive type of meat to eat. L: Of common meat animals. Some unusual meats are a little more expensive… Doug: Yes, of common meats. Bald eagle drumsticks are much more expensive [laughs]. But beef is traditionally the rich man’s food. Crisis notwithstanding, a lot of people around the world are getting wealthier, particularly in China. India is not far behind, but there is a cultural issue with beef and Hindus, of course. I think we have a rare opportunity right now to buy low, while beef herds are collapsing. That’s exactly what I’ve done with a number of friends; we’ve bought a lot of land in Argentina and are raising cattle. L: It’s basically a bet on rising global affluence as the underlying trend. Doug: To a degree. But it’s more a bet on significantly lower supply combined with steady demand. In real terms, cattle prices are at about 40-year lows. As bad as the global economy has been, one might think they could have gone even lower -- the economy does affect them -- but they’re very low. In fact, the worst day I ever had trading commodities personally was back in 1987, when I thought that cattle were quite cheap. And you remember that day in 1987 when the stock market fell out of bed like five hundred points or something like that. L: Black Friday. Doug: Yes, Black Friday. And I was personally one of the largest players in the cattle market at that point. I was short puts and long contracts, of both feeder cattle and live cattle. It was a horrible day, because the day after the market collapsed, the cattle market collapsed. Everybody figured: “Oh my god, it’s a depression, nobody is going to be able to afford beef, so we better sell.” It was a nightmare for me [laughs]. So, you’re quite right; cattle are a play on prosperity. So why, if I believe we’re sliding into the Greater Depression, am I long cattle? Because you’ve got to be a buyer when everybody else is a seller, and everyone else is a seller right now, because no one can make any money on cattle. That’s number one. Number two is that, despite the fact the world is going into a depression, the world population will continue growing, and the countries in the Orient are going to do relatively much better than countries in the West, so I’m willing to bet on rising beef consumption. Number three, real cattle prices are at generational lows. But I’m not speculating in cattle; I’m investing in cattle. I’m not doing anything with them in the futures market. L: There’s no leverage on what you’re doing; you are actually buying cattle. Doug: Yes. I’m buying land in northwest Argentina, which to me is the most attractive part of that country – and the country itself is very attractive indeed. We’ve bought a number of large, dormant farms where we clear the land, fence it, put in wells, and plant in grasses the cows like. We bought Braford females – heifers – and they calf every year. We now have about fifteen hundred cows. Every year we get about twelve hundred new babies, and then the babies have babies. We sell the male calves for current income, to finance the clearing and fencing of more land and putting in more wells. And we let the heifers grow and reproduce. It’s a form of compound interest. Plus, the land is worth considerably more after we improve it -- a big bonus. And since our cattle are all grass-fed, and we own the land for cash, and the Gauchos earn roughly two hundred and fifty dollars a month, we don’t have much in the way of costs. I’m a big fan of grass-fed beef. Most cattle spend the best part of their adult lives in feed lots. They’re packed chock-a-block next to each other (moving burns calories and takes off weight). They’re fed things cows don’t naturally eat. And they’re pumped full of growth hormones and antibiotics. The end product is okay for a mass market that wants cheap beef, but it isn’t what I want. L: Is your reason for doing this in Argentina because the market is there (Argentines love to eat beef)? Or is it because land and labor are cheap, and it’s such a good place to be in the business? Why Argentina? Doug: I picked Argentina because out of the hundred and seventy-five countries I’ve been to, the fact of the matter is: I just like Argentina more than any other place I can think of. L: Even Thailand? Doug: Well, it’s perverse. Thailand is exactly the antipodes of the globe; it’s as far from Argentina as you can get geographically, and it’s about as far as you can get from Argentina culturally as well. They are just opposite and antithetical in so many ways. But the fact of the matter is, those are my two favorite places on the planet. L: But Argentina edges Thailand out… Doug: It does. That’s because I like the wide-open spaces. I like the estancias [ranches]. I like the barbeques. And in Thailand, as much as I like it, the fact is that as a Westerner, you are never going to be a part of Thai society. Forget about it. No matter how many Thai friends you have and so forth, you’re still always going to be an outsider. But that’s not true in Argentina, because it’s the most European country in the world. It’s more European than Europe at this point, quite frankly. And, completely unlike Thailand, it’s a country of immigrants. So, especially as my Spanish improves, I can actually become part of the society. Entirely apart from the fact that the upper classes, and the kids, all speak excellent English. On the other hand, in Thailand maybe there’s an advantage to not being part of the society, because… you really don’t exist. You are like what Chinese would call a Quai Loh – a foreign ghost or foreign devil. You are not an element to officialdom; you’re a permanent tourist. It’s a double-edged sword; it depends on what you like. L: If you’re an anarchist, why would you want to be part of society? Doug: Well, I’m a fairly social anarchist. We like society as well as anyone -- we just don’t like the state. I just want to be left alone by the authorities. An anarchist can feel pretty mellow in Thailand because of the foreign-ghost effect. And pretty good in Argentina for different reasons – it’s full of Spanish-speaking Italians who don’t like to do what they’re told. We got into the cattle business as a consequence of wanting to buy estancias, because the land prices were so low. They were just begging. The country is so pretty, and the society is just so nice, I wanted to become a part of it. When you have this land, you have to do something with it. In addition to buying a beef cattle herd with some friends, I personally bought a dairy farm -- but, again, with no cattle. I bought the dairy herd from another farmer – a wealthy guy – who wanted to get rid of it. This was during the soybean and corn boom of eighteen months ago. He had a hundred and thirty Holstein dairy cows, and he told his farm manager: “Get rid of these things. They are a rounding error on my balance sheet, and the ground they are taking we can use to plant soybeans and corn.” So I bought them at an excellent price. In fact, the deal I cut with the guy, because dairy herds were also already in liquidation then, was this: he said, “Alright, you take the cows in exchange for one year’s milk production from them.” So, the cows graze on land – that doesn’t cost me anything. And my Gauchos, they were just sitting around, and I had to find something for them to do. So now they can milk the cows, and I just gave him a year’s milk production. L: So, in addition to the beef play, is there a dairy play? I’ve heard that not only beef cows are in liquidation, but milk cows are being turned into hamburgers. That should create a supply crunch, and there should be money to be made in the dairy business. Is that right? Doug: That’s totally true. Dairy prices have fallen about fifty percent in the last couple of years. L: But are dairy prices really falling? It doesn’t seem that milk is any cheaper in the supermarket… Doug: They must be, because the milk prices the farmers receive most places in the world are down fifty percent. Going back to what you said earlier, one of the reasons I thought that Argentina would be the best place to do this, is because of the stupid fascist government down there. They try to control everything, including the price of beef. All your input costs are very low, partially because it’s a depressed economy, and partially because of price controls. Land and labor are extremely cheap. But when you sell beef, you don't sell it at the world market price in Argentina. And when you sell milk, you don’t sell it at the world market price in Argentina either. So, I’m looking for significant profit from the fact they are now controlling the prices. But that will come to an end. Want to hear something unbelievable? It’s possible Argentina will soon become a net beef importer. One reason is the drought in Buenos Aires province, which is exacerbating the already extraordinary liquidation of herds. But more important by far are the price controls. Between the drought, the boom in grain prices, and the controls -- meant to artificially depress beef prices to bribe poor voters -- Argentina is creating a beef shortage for itself. It’s like creating a sand shortage in the Sahara. Reality alone will bring the controls to an end. Also, I have a feeling that we may see a shift to the right when the next elections come up in 2011. Two of the leading candidates to replace Christina [Argentine President Christina Kirchner] are both free-market-oriented guys. I don’t mean radically free market, but pretty free market. Either could turn the place around, however, much the way Roger Douglas turned New Zealand around in the mid-eighties. And if that happens, Argentina could boom and blossom, and the value of my land and cattle would jump just from the releasing of controls. Joining the real world market could result in a double overnight. L: So, there’s a political speculation as well. Doug: Yes. The best speculations always capitalize on a politically caused distortion. My dairy herd, within the next couple years, will be up to three hundred cows, which is the maximum capacity of my milkery or tambo [the word “tambo” comes from the Inca language, and in Argentina it’s a synonym for dairy farming]. And eventually, we should get our beef herd up to ten or twelve thousand head. And of course, when we are up to twelve thousand head, we’ll have ten thousand head that we can sell into the market every year. This would be a significant income stream. I think it’s a good time to get into the business, and Argentina is the right country, because of the price controls. L: For people who don’t want to go to Argentina or fear that the price controls may never be lifted, what other countries would you recommend? Obviously you wouldn’t want to do this in the U.S. Where would you go, if not to Argentina? Doug: The U.S. and Canada are huge beef producers, but they’re not ideal environments. For one thing, they have long, cold winters, especially in the plains states and Alberta. Cold takes weight off animals, so you have to feed them more. And the winter pretty much precludes their eating grass, so you’re feeding them hay or silage -- very expensive. Surprising to most people is that the largest beef-producing state in the U.S. is Florida. The winters are perfect -- but the summers are way too hot, and heat is also the enemy of beef. Plus, the pasture is generally very poor. Beef cattle can live on Florida grass, but horses, for instance, absolutely cannot. And the insects are a problem in a lot of places. Where we are in Argentina, the climate is ideal year-round, the grass is good, and insects aren’t a problem. I’d be willing to look at Brazil or Bolivia. Paraguay is very interesting, actually, in a lot of ways. The problem with Paraguay is that there are no transportation facilities there, besides trucks. It’s one of the best places in the world for growing everything from cattle to corn to soybeans, but the transportation for shipping the stuff out is very problematical. And if you want to get even stranger than that, I would go to the eastern provinces of Bolivia, the so-called Media Luna. Bolivia is really at least two different countries that are sociologically, demographically, and geographically as different as night and day. I think there is an excellent chance that Bolivia is going to split up in the future into at least two countries. The Santa Cruz/Media Luna area, which is the agricultural lowland, is also an excellent, politics-based speculation. The land in the Media Luna is very cheap and it’s really beautiful, albeit in the middle of nowhere. Let the Quechua and Aymara [the languages and the people who speak them in the Bolivian highlands], which Morales [Bolivian President Evo Morales] belongs to, in the dry highlands have that area. I like Brazil, too, but it has done so well in recent years, it’s not particularly cheap anymore. So I’d rather go for places that are cheap, where I can see a possible explosive upside as opposed to a place that’s nice like Brazil, but where the market recognizes that it’s nice, and that’s already reflected in the prices. L: Are there places you might go outside of Latin America? Europe is as controlled as the U.S., but some governments might decide to support some agriculture. Say, Denmark suddenly decided it’s going to subsidize the dairy business, would you consider going there? Doug: Well, dairy is the biggest form of agriculture in Denmark; and since it’s Europe, I presume it’s already heavily subsidized. But I don’t know of any such opportunities there right now. Western Europe is high cost, high regulation, high tax. And too far north to be very productive. I’d forget it. Eastern Europe is a possibility. Land is still relatively cheap in Serbia. L: Yes, and they have a flat tax structure and free trade with Russia – so you’d have access to the whole Russian market. Doug: Yes. Ukraine and Romania might also be interesting, since the Eastern European property market has collapsed. But the problem with farming operations is that you’ve got to supervise them. There is a saying in Spanish: El ojo del amo engorda el ganado. L: “The eye of the master fattens the cattle.” Doug: Yes. The fact is, if you are not there, and you don’t have people who are really reliable… L: I get it – as you said, you like living in Argentina. So you’d have to like living in Serbia or the Ukraine for it to make sense to get into the cattle business there. Doug: Right. That goes for Argentina too [Laughs]. So that’s the problem with investing in farming, on a first-hand basis; you’ve got to be on the spot several times a year, and you’ve got to have some degree of confidence in the guys on the ground running the operation. But I think it’s a good thing to do if you have an inclination, have the capital, and want to spend time there. L: And for the people who don’t want to buy a ranch, is there an ETF in cows? Or is there an easier, less laborious way to invest that you can recommend? Doug: Yes, there are a couple of relevant ETFs – at least one for cows. There are futures in all the agricultural products. But that’s a day-to-day kind of thing that requires its own due diligence and effort. L: If you grow your own herd, you don’t have to be right on the timing, you just have to be long when the time is right? Doug: That’s right. When you are actually growing the cattle, you just have to be right on the trend, as opposed to picking the right day when you are speculating. All things considered, I think the countries in South America are the most interesting, for all kinds of reasons. But part of that is my taste. The key is this: if you’re going to buy real estate abroad anyway, for the kinds of reasons we discussed in our conversation on currency controls, or others, you should pick land in a place you enjoy being. And if you’re going to do that, you might as well put the land to work – with cattle and dairy herds being an obvious way to do that. For me, this adds up to a working estancia in Argentina. For others… it’ll be wherever the stars align for them. L: Got it. You know, I do like Serbia… and Belarus… I wonder… Doug: Have fun. Doug Casey is the chairman of Casey Research and co-editor of Casey’s flagship publication, The Casey Report. One of Doug’s favorite sayings is that the Chinese word for “crisis” consists of two symbols – one means danger, the other opportunity. And that’s what Doug and his team are best at: with an unfailing instinct for emerging trends and budding opportunities, they consistently have been making double- and triple-digit gains for their subscribers. Right now, one of their favorite plays is betting on an economic development that is all but inevitable… Click here to read more.

More recent Conversations With Casey:

• Doug Casey: Mowing Down Green Shoots
• How to Stash Gold Bullion

Something Cooking in the Lumber Market?

Our friend Tom Dyson over at DailyWealth says that something may be happening in the world of lumber, according to one of his industry sources...Tom writes:

I have an "on the ground" contact who's seeing something else altogether... Don runs a large lumber supply depot outside Orlando. Last week, he sent me a "special commodity alert."

"Over the last 30 days," he wrote, "there have been significant increases in the lumber and plywood markets."

Pine 2x10s have increased 22% in the last 30 days.
Treated pine 2x6s have increased 29%.
Pine 2x6 borates are up 31%.
Spruce 2x4s are up 37%.
Spruce 2x6s are up 44%.
15/32 Oriented Strand boards are up 7%.
15/32 Plywood is up 12%.

It looks like there's something stirring in the lumber market. It could be a local aberration in Orlando... or it could be something bigger. I'm not sure, and neither is Don.

Let's keep an eye on the Chicago futures price to see if it confirms Don's view. In the meantime, I'll hunt for more clues from lumberyards in other parts of the country...

Lumber prices are low, low, low - this is definitely something worth keeping an eye on.

PS - If you like Tom's stuff as much as I do, you may want to check out his outstanding newsletter The 12% Letter, which I read religiously myself.

Is it (Gasp) Time to Short Gold? This Week in Commodities

Daily Crux Editor Brian Hunt reports that bullish sentiment for gold in investment newsletters is very high - "near extreme levels that marked the previous three tops in gold."

When everyone is bullish, that's trouble for longs...at least in the short term.

Need another data point? How about an insurance company hopping on the gold bandwagon!

The Crux also reports:

Northwestern Mutual, the third-largest U.S. life insurer by 2008 sales, bought gold for the first time in the company's 152-year history.

Gold is already down over $20 since these reports came out. Perhaps the old addage "sell in May and go away" should now be heeded. Short term traders may want to stay on the sidelines gold winds up for another run at the elusive $1,000 this fall...when it is seasonally stronger.

Gold keeps bumping its head on the $1,000 ceiling.

(Source: Barchart.com)

Dollar Rally Overdue

The dollar is a bit oversold as of late, and appears to be due for a short term pop. This may have begun last week. How long and far this will go is anyone's guess - but I'd imagine it won't last for too long.

The long term trend of the US dollar is unmistakeably down. Check out the chart below for a little perspective - since 2002, it's been a fairly orderly march downwards for the dollar:

The long-term trend of the dollar is still down.

(Source: Barchart.com)

Sure puts the recent dollar rally in perspective, doesn't it?

With fundamentals worse than ever, it's hard to picture the dollar mounting a sustained offensive.

The Fourth Turning...Am I Insightful, or a Complete Dumbass?

My review and discussion of The Fourth Turning last weekend has sparked quite the discussion over at Seeking Alpha. Some folks enjoyed the review, while others think I need my head examined! Let us know what you think!

Subscribe By Email

We now have a couple of email subscription options. You can subscribe to these weekly posts by entering your name and email into the form at the end of this post. Each week I'll ping you a copy of this post.

In addition, you can subscribe to all posts by using the form on the left side...just below the ads. This is managed by Feedburner - each time we post, you'll receive it via email.

In Case You Missed It...This Week's 5 Most Popular Posts...

1. The Fourth Turning...Into the Greater Depression? (Also published by Seeking Alpha)
2. Doug Casey: Foundations of Crisis
3. Chinese students laugh Tim Geithner out of town
4. How do gold stocks perform in deflationary depressions?
5. How geography drives the global economy
   

Positions Update

This week would have worked out fine for me, had it not been for...not just one...but TWO ill-fated attempts at pyramidding my Aussie dollar position.

Monday I added another position after the A$ began the morning strong. All looked good, until that evening, when I made the cardinal sin of checking the Asian markets! I panicked and sold the position.

Then later in the week, Australia reported strong GDP numbers (maybe not too strong, but certainly much "less bad" than much of the rest of the developed word). The A$ cleared $0.82, and seemed destined for $0.85!

So what happened? Profit taking and a rally in the US dollar! I had to cover and the A$ continued to drop, settling slightly down on the week.

Moral of the story - I had no business adding to this position, because I don't have enough dry powder to comfortably take it on. "Sell to the sleeping point" is the old maxim, and I can sleep comfortably with one long position in the A$.

To mollify my inner need to pyramid, I did pick up another mini beans contract :)

Current open positions:

Current Account Value: $32,534.24

Cashed out: $20,000.00
Total value: $52,534.24
Weekly return: -5.3%
2009 YTD return: -36.0% (Don't call it a comeback??)

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

Initial stake: $2,000.00

Weekly Commodities Review: Which Side of the Corn Trade Should We Take?

On Monday, the USDA released it's agriculture supply and demand projections, which sent grains "limit down" for the day across the board, and many of the softs down sharply as well.

That proved to be the worst of it - as grains slowly recovered during the week as the market digested the news, finishing the week off with a sharp rally on Friday.

As you can tell from my positions as of last Sunday, I was not prepared to handle a "limit down" day across the grains board. It's one of those days that, as a leveraged trader, you just want to vomit.

I had an offsite meeting in the morning, so returned to the home office after markets had closed to see the carnage. Not only was I down 25% (!) on the day, but also still had these positions open. Everything had closed limit down, and I had no clue where this market was going to find a bottom - and even when I'd be able to get out of these positions.

Fortunately I was able to get out that evening during the Asian trading sessions - basically covered the grains positions and also my Treasuries short, leaving only cotton open.

Then while sipping some wine and reading the WSJ later that night, I read analysts mentioned they liked soybeans more than corn. So the next day, I went long soybeans, and short corn - nothing like a little wreckless pair trading to get over a big loss.

Well this trade actually held up OK until Friday morning, when, bless his heart, my commodities broker Robert gave me a call.

"Brett, I'd really like to get you in on this corn trade. It's trading $0.50 below the cost of production. Farmers are already switching to soybeans."

After picking Robert's brain for about 10 minutes, I had him put the trade through for me (he manages my Rollover IRA account), and ran to my computer here to cover that corn short, and then go long.

Phew - not a moment too soon - corn finished the day on a sharp rally.

Yesterday I did some online research and found that, indeed, it could be a difficult year for corn farmers. $4 corn ain't what it used to be for these guys, with input costs sharply higher these days.

We'll continue to watch the corn markets closely.



Recommended reading:

• Doug Casey believes we've begun what he calls "The Greater Depression." In this insightful article, he explores the foundations of the current crisis we're facing.

• Sugar prices continue to climb, and there could be a supply shortage shaping up soon.

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	389 3/4	$750.00
12/31/08	Long	1	MAR 09	Cotton	48.52	48.84	$160.00
01/13/09	Long	1	MAR 09	Mini Soybeans	987 1/4	1020	$327.50
01/13/09	Long	1	MAR 09	Mini Soybeans	989 1/4	1020	$307.50
Net Profit/Loss On Open Positions							$1,545.00

Account Balances

Current Cash Balance	$39,234.38
Open Trade Equity	$1,545.00
Total Equity	$40,779.38
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$40,779.38

---------------------------------------------
Cashed out: $20,000.00
Total value: $60,779.38
Weekly return: -16.0%
2009 YTD return: -19.7%

2008 return: -8%

***"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.

Cocoa in Short Supply? Cocoa Futures on the Move

Just caught this informative piece on Seeking Alpha which makes a bullish case for cocoa futures, due to very tight supply.

What's driving cocoa prices higher? Supply, supply, supply.

Back in February of 2008, tight supplies were forecast in the cocoa market, along with higher prices. Analysts called for a 14% rise in cocoa prices in the U.S., which would have pushed prices up to $2,325/tonne.

They underestimated the move: Despite the broader pullback in financial markets, cocoa in NY was sitting at $2,626/tonne on Friday, December 26. If NY cocoa hangs tight, it could end the year some 30% up - an outstanding performance given the other pricing trends in commodities right now.

Music to my "long cocoa" ears.

Expert Commodity Picks for 2009: Jim Rogers and Marc Faber

What a crappy year 2008 was for commodities! Will they rebound in 2009? If you believe, as I do, that we are in the middle of a secular bull market for commodities, then current prices represent a tremendous buying opportunity.

Jim Rogers has been saying it best lately - that you want to buy assets where the fundamentals are unimpaired. And the only asset class where the fundamentals are currently unimpaired is commodities - in fact, the fundamental story for many commodities has even improved since the financial crisis took hold, as there is a lot of supply coming off the market.

Jim is also fond of referencing the performance of commodities during the Great Depression, where they were the first asset class to turn up because there was no supply.

Since I agree with Jim's point of view, I decided to research specific commodity picks experts are making for 2009. My "expert" criteria is highly biased, based on the two people I've been following the closest during this commodity bull run - Jim Rogers and Marc Faber - because of their prescient calls and knack for spotting commodity trends before the herd.


Jim Rogers

• Likes agriculture and says prices are down due to forced selling, not fundamentals, which have actually improved. "Farmers can't get loans for fertilizer now."
• Also loves oil - says it has been crushed - it's price is below the cost of production - he's been buying more, and believes it will roar back in a big way.
  

Marc Faber

• Says 2009 will be a "total disaster" for the global economy.
• Believes commodities have corrected within a bull market, and there are opportunities to be found there.
• Sees significant inflation coming as a result of the Fed's actions.
• He continues to like gold and gold miners - believes exploration companies are very depressed with respect to the price of physical gold.
  
• Oil at this level is becoming attractive, as are oil companies.
• Shares his specific picks at the 7:45 mark of this interview.
  

Editor's Note: This article was also published by Seeking Alpha.

Click on their respective names to read more Jim Rogers and Marc Faber coverage.

For more information on investing in gold miners, check out some of our recent coverage of gold and gold stocks. I personally subscribe to BIG GOLD, produced by Casey Research, which is an excellent service.

My Yearly Commodity Returns Since 2005

Well it's time to close the books on the 2008 investing year. One that started off with so much promise for commodities, and ended up being the crappiest year in about 50 years for our beloved commodities.

As for me personally, I started great, and lost all of my gains plus some since March. No sense dragging out the gory details - you can peruse my previous Weekly Update posts throughout the year for those.

All-in-all, it was my first down year since I started investing in commodities in 2005. But it certainly could have been worse - I'll live to see 2009, and that's all you can ever ask for I think.

2007's Yearly Returns Post

My yearly returns investing in Commodities - as of Dec 31, 2008:

• 2005: 802%*
• 2006: 60%
• 2007: 175%
• 2008: -8%

*Account opened with $2,000 on 4/28/05. This number is especially gaudy because I loaded up on a couple of sugar contracts (more leverage than I should have used) and rode sugar from 9 cents up to 14 cents. Nice trade but lucky timing, which I am grateful for.

Happy New Year!

Jim Rogers' Outlook for 2009

Some great coverage of Jim Rogers' investing outlook for 2009 by GreenLightAdvisor.com.

A brief excerpt of the summary provided by GreenLightAdvisor.com:

The facts are, during this period in time the only thing to have its fundamentals unimpaired is commodities.

• Farmers can’t even get loans for fertilizer now.
• The supply of things is going to be in even worse shape coming out of this.
• The IEA recently came out with a study showing that the worlds reserves of oil are declining at the rate of 7% per year.
• you can do the arithmetic, the supply of everything is going down; oil and everything else;
• we’re going to have serious supply problems before too much longer.

The 2009 Commodity Trader Calendar - On Sale Now

This is some combination of cool and hysterical - the 2009 Commodity Trader Wall Calendar. Maybe 40% cool, 60% hysterical?

CALENDAR FEATURES
• Expiration Dates for Futures & Options Contracts
• Internet Commodities Resource Guidebook
• Government Report Dates & Holidays
• Long Term Historical Price Charts
• Secrets from the Pit
• Conversion Tables
• Market Hours Chart
• Margin Sheet

I might have to pick up a copy for the old home office - $30 with shipping, so a bit pricey. But hey, it's all about ROI, right?

I'm not affiliated with the calendar, unfortunately, though I should have called them up and asked to be a sales affiliate. Maybe next year.

If anyone buys it, please leave a comment here and let us know what you think.

Jim Rogers on Bloomberg: November 3, 2008

Editors Note: Click here to read other recent posts about Jim Rogers, including some recent videos.

I don't know about you, but I've got a case of the election blues. And not because my guy didn't win - I didn't even have a horse in this race, I couldn't bring myself to vote for any of these turkeys.

So to cheer up, I've dug out the latest Jim Rogers video. Now here's a guy I KNOW is angrier than I am right now - with free market economics going the way of the Dodo Bird, Tyrannosaurus Rex, and the capital gains tax cut (ugh).

Jim Rogers' latest thoughts (and some great one-liners):

• Bailouts are going to lead to inflation, higher interest rates, and a declining dollar

• The US is making the same mistakes Japan has made, by not letting bad banks fail

• My favorite line: "Ben Bernanke is not even as smart as Greenpan, and he was not smart at all"

• My 3rd favorite: "You can have 10-15 years of bad economics, or you can have 1-2 of bad economics"
• My 2nd favorite: "All (Paulson) has to do is resign and close the Federal Reserve, and the crisis takes care of itself"

• Another gem: "That's why they're in politics - because they don't know anything"

• The only way to make money is to buy the things where the fundamentals are unimpaired - and the only thing that fits that bill is...drumroll...wait for it...wait for it...commodities!

• He owns gold, but the IMF is about to sell a lot of gold - so it could go to $600. If it does, he'll buy a lot. If it goes to $900, he'll buy a lot.

• He's buying agriculture, oil, and shorting government bonds "today"

• Sugar's going to go through the roof over the next two decades - and he breaks out a packet on air!

Part I:

Part II:

Marc Faber on CNBC - October 14, 2008

In these crazy times for the market, I'm turning my attention to the few prognosticators that have nailed the story so far.

Marc Faber has certainly had some impressive calls recently. On July 10th, he predicted that deflation will rule the day in the short term. And as far back as March 29th, he voiced concern that massive deleveraging could drive down asset prices across the board.

I've posted the latest video of Marc Faber on CNBC yesterday (October 14, 2008). Faber currently believes:

• Downside to the US dollar is limited from this point
  
  
• Resource related currencies (Australian dollar, New Zealand dollar) both have room to move up from here, but he believes we have seen their highs
  


• Does not like gold exploration stocks - because exploration is difficult, and because they rely heavily on outside capital
  
  
• Prefers physical gold
  
  
• Likes commodities in the long run
  
  
• Says the best thing to do right now is to "take a holiday"
  
  
• Be careful about getting suckered into stock market rallies - in late 1929, the market bottomed out and rallied 50% going into the summer of 1930...only to collapse another 90% from there!
  

Part I

Part II

Part III

Quick Thoughts on The (Very) Latest Black Monday

• So is this column a new Monday tradition?

• If you haven't already, please be a good student of history and review my thoughts from the last Black Monday - they are all still relevant.

• Sure looked like the old Plunge Protection Team was out in full force this afternoon - could we have seen a 1000 point plunge for the Dow if not for the PPT?

• The best place to be right now is cash. We're going to have some great buying opportunities someday, but it's not here yet. Please, protect your capital in the meantime.

• A good friend forwarded me a copy of Dennis Gartman's letter today - Gartman is up 4% on the year, and is feeling pretty good about it, since the S&P is down over 30%. Even Gartman is fearful right now, he has no idea how to trade these markets.

• So much for the bailout calming the markets, eh?

• Finally - an early Christmas present for me - I woke up to find the Yen up $.04 overnight! I promptly sold. I was burned once before for not selling the Yen and Swiss Franc after a gap up, and didn't want to make that mistake again. Could the Yen keep going up? Sure, and I think it probably will. But I also think I'll have a chance to buy it back at slightly cheaper prices.

• Yes, the Yen carry trade unwound in a big way - more forcefully than I ever would have imagined. For a couple of background primers on the carry trade, check out Chuck Butler's previous comments, along with some very prescient commentary from the Times Online back in March.

Quick Thoughts on The Latest Black Monday

• When stocks require a $700 billion infusion in order to tread water - is the risk/reward of being long stocks really worth it?

• Granted, there are a lot of quality stocks being thrown out like the proverbial baby with the bath water. If a rising tide lifts all boats, does it follow that a falling tide sinks them?

• If the government is reaction this way with the stock market only off ~20%, what will it do if stocks fall 50%? Stocks are still quite expensive by historical standards - it could be a slippery slope downhill.
  

• Remember, bull markets in stocks usually begin with P/E's in the single digits, after everyone has thrown in the towel on stocks. I still see everyone in the financial media trying to pick a bottom - not nearly enough desperation for my liking.

• While they rarely ring a bell at the top or bottom, desperation in mainstream publications are often a good start. Remember this BusinessWeek cover from 1979?

• It may not yet be a global recession, but global stock markets look like they are already pricing in a global recession. Stock market action usually precedes normal economic action by 6-9 months - by the time a recession hits the midway point, stocks have usually hit bottom.

• I sure love commodities coming out of this global recession. I have a long buying list, and we already have some very cheap prices staring us in the face. Exhibit A: Cotton futures fell below 60 cents today.
  

Deflation Everywhere You Turn, Get Comfortable

My morning glance at the Futures screens revealed that, well, just about everything is down across the board. Of special note:

• Cotton flirting with the 60-cent handle (wow, that looks cheap)
• Silver getting kicked in the teeth again
• Oil off big again, flirting with $90

Not to mention global stock markets getting slammed across the board.

In fact the lone positions weathering this storm appear to be our old friend, the Japanese Yen, and US Treasuries - both due to this flight to "safety".

Maybe "perceived safety" in the case of Treasuries - is it really safe to lock in a long-term yield that is below the rate of inflation, to a heavy debtor with an awful balance sheet?

I'm playing this mostly from the sidelines. I've got my long Japanese Yen position, which is performing nicely. While adding another contract may be the trade to make, I'd like to see how the rest of the week goes at the very least. I don't like buying the Yen, and the Swiss Franc for that matter, on these spikes, as I've seen them give back these gains before.

Also have my short Soybeans contract - which looks like it wants to bust through that lower level of resistance.

All in all, we may need to hold tight on the commodity front until the global economy gets through this soft spot. My suggestion would be to get comfortable. When the global economy reheats, we will have some fantastic buying opportunities.

My Current Commodity Futures Positions - 9/14/08

A special Blogging the Commodity Bull Market shout out to my good friend Lance, who works at a prominent New York investment bank.

Lance (name altered to protect the innocent) is a regular reader of our blog, though he is strictly forbidden from commenting whatsoever due to his professional ties.

Via a text message exchange we had today during the late NFL games, Lance provided me with some key insider info: "hope ur long oil pal! dump the dollar". Lance went on to recommned that I "buy the norwegian krona".

Though these text messages no doubt were sent after a beer or ten, we give a hearty salute to Lance. And armed with his information and insights, I have indeed covered my short British Pound position, preparing for the next flush of the dollar down the porcelain bowl.


A review of my trades from the week that was:

• Closed out my short British Pound position - twice - I closed out my two short BP positions last Sunday night when the dollar rally looked over. Then the dollar surprisingly bounced back, and I shorted the BP again - and then covered again tonight, after watching it pop up nearly 5 cents since Friday. Both the BP and the Dollar are flawed currencies circling the bowl - the question is, which will circle towards the bottom faster.
  

• Shorted Soybeans - Beans look like they may want to break down. My research is telling me that a good harvest will put plenty of beans on the market. I'll quickly exit if beans rally on bullish harvest news.

Other existing positions I've got:

• Long the Japanese Yen - So far, so good.
  

My wish list (waiting for an uptrend):

• Sugar
• Cotton
• Coffee
  
• Swiss Franc
• Natural Gas
  
• Silver

Open Positions

Date	Position	Qty	Month/Yr	Contract	Entry Price	Last Price	Profit/Loss
09/04/08	Long	1	DEC 08	Japanese Yen	0.9340	0.9455	$1,437.50
09/09/08	Short	1	NOV 08	Mini Soybeans	1168 1/4	1189	($207.50)
Net Profit/Loss On Open Positions:							$1,230.00

Account Balances
Current Cash Balance	$54,504.37
Open Trade Equity	$1,230.00
Total Equity	$55,734.37
Long Option Value	$0.00
Short Option Value	$0.00
Net Liquidating Value	$55,734.37

Cashed out: $20,000.00
Total value: $75,734.37

Weekly return: -7.2%
YTD return: -1.1%

***"Cash out" mostly means taxes, but lately I've also been using it to pay down my credit cards a bit. Why credit card debt? I'm financing a startup and trying to outpace my CC interest rate in the futures markets - kids, don't try this at home.

There Are No Free Markets Anymore

There are no markets anymore, just interventions - Chris Powell, GATA

I cannot phrase the current state of the global markets any more succinctly than Chris Powell did in the title of his fantastic article for GATA.org.

First, let's consider this Bloomberg report that the US, Europe, and Japan devised a plan to prop up the dollar in mid-March - with the fruits of their labor resulting in this massive dollar rally.

Also, an article by Vincent Bressler at GoldSeek.com. I'd highly recommend a read - here's a brief excerpt:

For the last month the US Treasury, in conjunction with the CTFC, SEC, Goldman Sachs and others have conspired to annihilate gold and silver on the futures exchanges of the world in conjunction with massive intervention to prop up the US Dollar vs other currencies.

Let's you and I, dear reader, review the Federal Government's ailments entering this summer:

1. Prop up the stock prices of the financials. With equity prices depressed, the financials would be sunk, as they wouldn't be able to raise more capital without severely diluting their existing shareholder base. FED RX: SQUEEZE THE FINANCIAL SHORTS
2. Prop up the dollar. FED RX: COORDINATED INTERVENTION WITH OTHER CENTRAL BANKS.
3. Control the prices of gold and silver. The dollar cannot be viewed as a "safe haven" if gold and silver are doing moonshots. FED RX: DRIVE THE PRICES OF GOLD AND SILVER DOWN SO SHARPLY, THAT ALL LEVERAGED TRADERS ARE FORCED OUT.

#1 - Check...#2 - Check...and #3 - Check, plus extra credit for all of the leveraged traders that have been busted

Ha - I'm still standing you bastards! :)

So the million dollar question (priced in gold, of course) is...how can we "invest" in markets that are being manipulated in such a grave fashion? Especially when we're opposing the House!

Should us commodity nuts just give it up, and start buying shares of Apple and Google?

Call me an old school, free market, libertarian kind of guy - but even in this hour, a very dark hour for free markets - I don't think, for one second, that these bastards are going to be able to manipulate these markets over the long term. And I plan to trade accordingly, and make all the money I can, while I'm still allowed to do so.