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Growing Inflation In Commodity Prices?

Commodities / Commodities Trading Aug 10, 2009 - 03:47 AM GMT

By: Andrew_Abraham

Commodities

So many economists and government officials are claiming inflation is dead. These are probably the same people that did not see the Great Recession coming. The fact is everyone has an opinion, however everyone is only entitled to the facts. The facts that are evident are multi fold.


1. Global demand is increasing in the commodity markets
2. Droughts & Floods are reaching historic precedents
3. Tremendous amounts of debt stand the possibility to cause debt deflation which leads to inflation.
4. Some commodity prices are already moving up rapidly

The above is not my imagination but we see the reality unfolding under our eyes. The current sugar crop is vastly diminished due to droughts and floods from India to Brazil. Global demand in Sugar exceeds output by as much as 5 million metric tons in the year through September 2010 according to reports. In other words there is a shortfall in the magnitude of a two year supply.
According to the commodity bull Jim Rogers, he believes sugar is going to go much, much higher during the course of the bull market in the commodity arena. Jim Rogers, chairman of Rogers Holdings, said in an Aug. 6 interview in Singapore. “Sugar is still 70 percent below its all-time high and not many things in life are 70 percent below what they were in 1974. Sugar has a wonderful future.”

Putting it another way 40 years ago sugar rose 16 times over five years and reached a record 66 cents in November 1974. Can you imagine how much money was made for trend following commodity trading advisors and their clients? Easy answer, fortunes.. Think a little further just this year Crude fell to a low in the high $30 dollar range currently Crude is at the $70 dollar threshold. It is very obvious there is some inflationary movement. The reality seems evident that commodity prices are set for some major moves not seen in decades. Time will tell but as a trend follower we do not need to know the future but have an exact plan how to take advantage of the situation when and if it presents itself.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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