Best of the Week
Most Popular
1.U.S. Inner City Turmoil and Other Crises: Ron Pauls Predictions for 2015 - Dr_Ron_Paul
2. What’s In Store For Gold Price in 2015? - Ben Kramer-Miller
3.Crude Oil Price Ten Year Forecast to 2025: Importers Set to Receive a $600 Billion Refund - Andrew_Butter
4.Je ne suis pas Charlie - I am not Charlie - Nadeem_Walayat
5.The New Normal for Oil? - Marin_Katusa
6.Will Collapse in Oil Price Cause a Stock Market Crash? - OilPrice.com
7.UK CPI Inflation Smoke and Mirrors Deflation Warning, Inflation Mega-trend is Exponential - Nadeem_Walayat
8.Winter Storms Snow and Wind Tree Damage Dangers, DIY Pruning - Nadeem_Walayat
9.Oil Price Crash and SNP Independent Scotland Economic Collapse Bankruptcy - Nadeem_Walayat
10.U.S. Housing Market Bubble 2.0 Meet the Pin - James_Quinn
Last 5 days
Ron Paul on U.S. Fed, Central Bankers Monetary Psychopaths - 29th Jan 15
Why Microsoft Stock Will Provide Major Investing Returns - 29th Jan 15
Exploring the Clash Within Civilizations - Mind the Gap - 29th Jan 15
Saudi Arabia Changes Kings, But Not its Oil Policy - 29th Jan 15
Crude Oil Price Bulls vs. Resistance Zone - 28th Jan 15
Acceleration Of Events With Rising Chaos – US Dollar Death Foretold - 28th Jan 15
The Fed and ECB Take the West back to when the Rich Owned Everything - 28th Jan 15
Washington's War on Russia - 28th Jan 15
Cyber War Poses Risks To Banks and Deposits - 28th Jan 15
Lies And Deception In Ukraine's Energy Sector - 28th Jan 15
EUR, AUD, GBP USD – Invalidation of Breakdown - 28th Jan 15
“Backup-Camera Envy” Is Driving This Unstoppaple Investment Trend - 28th Jan 15
The Great "inflated" Expectations for Gold, Oil, Commodities -- and Now Stocks - 28th Jan 15
How to Find the Best Offshore Banks - 28th Jan 15
There’s More to the Gold Price Rally Than European Market Fears - 28th Jan 15
Bitcoin Price Tense Days Ahead - 27th Jan 15
The Most Overlooked “Buy” Signal in the Stock Market - 27th Jan 15
Gold's Time Has Come - 27th Jan 15
France America And Religious Terror War - 27th Jan 15
The New Drivers of Europe's Geopolitics - 27th Jan 15
Gold And Silver - Around The FX World In Charts - 27th Jan 15
It’s Not The Greeks Who Failed, It’s The EU - 27th Jan 15
Gold and Silver Stocks Investing Basics - 27th Jan 15
Stock Market Test of Strength - 26th Jan 15
Is the Gold Price Rally Over? - 26th Jan 15
ECB QE Action - Canary’s Alive & Well - 26th Jan 15
Possible Stock Market Pop-n-drop in Store For SPX - 26th Jan 15
Risk of New Debt Crisis After Syriza Victory In Greece - 26th Jan 15
How Eurozone QE Works: A Guide to Draghi's News - 26th Jan 15
Comprehensive Silver Price Chart Analysis - 26th Jan 15
Stock Market More Retracement Expected - 26th Jan 15
Decoding the Gold COTs: Myth vs Reality - 26th Jan 15
Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch - 26th Jan 15
Draghi's "No-growth" QE Money for Stocks, Zilch for the Economy - 25th Jan 15
Unjust and Undeclared Wars - 25th Jan 15
The European Central Bank Commits Monetary Suicide - 25th Jan 15
Stock Market ECB EQE week - 25th Jan 15
Gold And Silver Timing Is Most Important Element - 25th Jan 15
The Best Way to Invest in the Next Alibaba Internet Stock IPO - 25th Jan 15
The Outpatient Surgery Business Rains Cash into Healthcare Stocks - 25th Jan 15
Stock Traders Flock to Gold GLD ETF - 24th Jan 15
10 Reasons Why You Need an Offshore Bank Account - 24th Jan 15
Goldman Sachs Blankfein - Regulation is Like Background Noise - 24th Jan 15
Gold in Euros Surges As ECB To Print Trillion Euros and Greek Election This Sunday - 24th Jan 15
Gold Bear Market Rally or New Bull ? - 24th Jan 15
Euro-zone 'QE already Working' Says IMF Lagarde - 23rd Jan 15
ECB and EU LTRO and QE for Dummies: Or, Make These Trades - 23rd Jan 15
Debt and Deflation: Three Financial Forecasts - There's More Than Falling Prices - 23rd Jan 15
Market Should Not Doubt' Mario Draghi ECB QE - 23rd Jan 15
Francs, Bonds, Barrels, and Bail-Ins - 23rd Jan 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of US Markets 2015 Report

2014: Year of Commodities (May)

Commodities / Commodities Trading May 05, 2014 - 10:03 PM GMT

By: Ned_W_Schmidt

Commodities

Thus far in 2014, April ended on schedule and May arrived as expected. Well-placed sources, wishing to remain anonymous as they are not at liberty to speak on the matter, suggest that June will also arrive on time. That seems to sum up the only accurate components of the consensus forecast for 2014. As the chart below portrays, just about everything else continues to do the opposite of what was generally expected by the popular seers on the future.


2014 YTD prices

In the above chart are plotted year-to-date returns for several investment measures. Bars on the left, the ones continuing to show significant positive returns, represent the three components of the commodity sector. To the right, using red bars, are what would be commonly referred to as underperforming groups. The term "underperforming" is used by the Street so as not to admit they recommended you load your portfolios with Techno/Junk losers. Oh, and what about the far-right bar for GDX, the ETF for more mature Gold and Silver mining stocks? How could that happen?

Perhaps the reason for the above results is a very simple truism.

When Russians are shooting down helicopters in Eastern Europe, one buys real stuff not paper fantasies.

When the probability of armies shooting at each other in Eastern Europe is a positive value, one buys real stuff. Armies possibly engaging in hostile actions enhances the values of real "stuff". In such an environment one buys Gold, Agri-Food, and oil, all of which have real value. One does not buy popular Techno/Junk paper fantasies.

Might the trends pictured above continue? Yes, is the best answer to that question for many reasons. One of which is a corollary to the investment rule promulgated above.

When adversaries engage in a shooting conflict, that situation is only resolved when one side is exhausted.

Yes, interludes in hostilities may develop, but the overall situation is never resolved by inept diplomacy. Fountain pens are only effective after the differences have been fully resolved on the ground. One would have great difficulty finding a similar situation in history successfully resolved by hot air from politicians and the ink in their pens.

A second reason for the investment results portrayed above is another principal.

When someone is dropping bricks on your head, move.

The Federal Reserve has now dropped the "fourth brick" on the heads of investors. Some, having already recognized the situation for what it is, and have moved out of the Street's Techno/Junk trading on the NASDAQ.

They have remembered the old monetary rule: Three steps and a stumble, two cuts and a jump. The FOMC has tightened monetary policy four times. That situation normally signals the onset of the beginning of a bear market in financial assets. Rationalizing that likelihood may fill time in the business media, but it will likely cost you money. Remember, "moving" out of Techno/Junk into real assets such as Gold and Agri-Foods is still the best defense against falling bricks.

So, will you move, or let bricks continue to pummel your head?

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To contract Ned or to learn more, use this link: www.agrifoodvalueview.com.

Copyright © 2013 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014