Why Markets Could "Slam the Speculator"
Peter Brandt, a technical trader who's been trading commodities for about 40 years, says that this is harvest time for commodities traders. Brandt boldly asserts, “Markets are getting set up to slam the speculator.”
These days, Mr. Brandt is particularly bearish on some things many other renowned investors have previously been quite bullish on: farmland, oil, natural gas, corn and other grains.
This is very surprising as both Warren Buffett and Jim Rogers have recently spent time preaching about the importance of investing in agriculture in today's tough market times.
Like everyone else though, Brandt is holding onto his bullish predictions for a long-term gold bull run. Additionally, he speculates that a “huge bubble” will be in store for Treasurys among other fixed-income investments when interest rates rise again.
Based on this information, here are five factors you will want to consider before making any major moves considering the current supply-demand phase the commodities world is now in (compiled by Market Watch).
Natural Gas Won't Make You Tons of Money Right Now
Natural gas prices can't seem to climb above the recent decade lows due to the increase of unseasonably warm winters curtailing demand amidst an overwhelmingly huge supply of natural gas in the United States.
Brandt warns investors to resist the urge to dive headfirst into and natural gas ETFs. At least not just yet...
Oil Isn't Doing Much Better...
Oil futures trades will be troublesome as well. Brandt believes oil will actually crawl back down to about $60 in a years time.
Brandt advised investors to avoid or take short positions on leveraged oil ETFs and exchange-traded notes, such as PowerShares DB Crude Oil Double Short ETN (US:DTO) and ProShares Ultra DJ-UBS Crude Oil (US:UCO), and even avoid the straight, nonleveraged United States Oil Fund (US:USO) . “It’s a sucker play,” he said about the oil-patch ETFs.
Short-selling Grain Futures...
Food prices have been rather high this year as fears of inflation continue to rise this year. Corn, grain, and other crop prices a “too high” according to Brandt. That's why he's short-selling his grain futures and harvesting his crop profits.
Brandt asserts, “there's nothing that cures high prices like high prices.”
Is Farmland Really a Good Investment?...
Not in the eyes of Mr. Brandt. He perceives agricultural investments as being little more than risky business as he believes that agricultural products are now in a bubble. Moreover, he interjects that the price of farmland is currently “at an obscene level.” Farmers can't feasibly make good money and, therefore, why should investors rationalize that farmland is a smart investment decision?
High food prices and demand from Asia is responsible for the recent land rush, but Brandt seems certain that more realistic (reduced) prices are sure to settle in sometime in the near future. When that happens, investors owning thousands of dollars of land in the middle of nowhere will begin to get nervous...
“The only reason you own farmland today is the belief that you can sell it to the next sucker for more than you paid.”
His warning to investors who have exposure to farmland: “Scramble quickly. Land is not a liquid asset. You want to sell it on the way up.”
Gold May Surge to $2,200 an Ounce...
Brandt has an extremely bullish gold forecast for gold's next big move. In what many are calling “the most boring gold market ever” gold is now in a perfect position to break out with the potential to make a pretty substantial move upwards.
Brandt reminds readers that present-day gold technical analysis reveals a market that closely resembles a period in 2009 when gold prices drifted sideways and remained relatively stagnant for several long months. Those situations are aptly suited for sharp rallies. As further incentive to stay long on gold, Brandt says that the dull gold market has recently “washed out a large swath of buyers.”
So if you can trudge through these mundane gold days, a big move may reward your patience in the end...
JER1
