The Time to Buy Commodities is Now
Here I am, ladies and gentlemen, high atop 111 Market Place, bringing you wit and wisdom — and occasionally investment advice — from the most dangerous city in America, Baltimore.
That’s right. We’re dangerous...
From the Baltimore Sun:
USA Today reviewed the homicide rates in the nation’s 50 largest cities and Baltimore came out on top. The 342 homicides the city experienced in 2017 were a 17 percent increase over the prior year, and translated to a rate of 56 killed per 100,000 people.
That easily outpaced New Orleans and Detroit, which both had about 40 killings per 100,000 people, according to the report.
But don’t worry, our beloved mayor, the overmatched Catherine Pugh, said that was last year.
This is now 2018, which will be entirely different. She also hired a new police commissioner. I won't mention his name because he will be gone before you know it. Baltimore has had more new commissioners than the Cleveland Browns have had quarterbacks, with the same results.
What does this have to do with the markets, you ask? Nothing except to point out the general buffoonery in government these days.
As the FBI goes after Russian bloggers and Twitter idiots, it no longer does the fundamentals. The Republicans — the party of fiscal restraint — have decided to spend another $9 trillion we don’t have. And the new head of the Fed, Jerome Powell, wants to jack up interest rates in the face of a massive, overblown, lava-spewing, booming economy of 2.5% GDP growth.
That last bit was sarcasm.
The U.S. Federal Reserve chief, in his debut testimony to Congress on Wednesday, struck a mildly hawkish note, noting inflation had risen since December and vowing to prevent the economy from overheating.
That was enough for traders to add bets on the Fed squeezing in another rate rise this year, with futures tied to target policy rates now pricing a one-in-three chance of a fourth hike.
Our new man Powell wants to raise rates because he thinks the economy might overheat. An overheating economy would lead to the building of new factories and such, which would add to production, which in turn would create demand-pull inflation.
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I don't think the economy is overheating by a long shot. But I would love to see it happen because you can make a lot of money in a boom cycle.
This type of economy is very good for commodity producers who jack up prices in the face of high demand.
Here is the 10-year Dow Jones UBS Commodity index ETF (NYSE: DJCI). Each candlestick represents a month.
As you can see, commodities bottomed in the spring of 2016 and have been rising ever since. We have a nice pinnacle formation that is at a critical juncture.
If we break above that top line at $17.11, we will be off to the races. At that point you start buying junior miners like crazy because 1,000% gainers are probable at this point in the investment cycle.
When the above index returns to 35, you should worry about overheating.
I’ll tell you more about the upside in demand-pull inflation next week. Now, I’m off to fight the roving hordes of murderers and thieves on my way to the parking garage. Where did I put that Louisville Slugger with the spikes in it?
For your profits,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
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