Weekly Commodities Review – Next Stop: Gold $1,000

Weekly Commodities Review – Next Stop: Gold $1,000

Next Stop: Gold $1,000

Gold has a date with destiny. Destiny may not be at the bar yet, but she’s now definitely circling the parking lot, looking for an open spot outside the Gold $1,000 comeback party.

My comments on gold from last week’s commentary, which were verified to some extent by the continued rally this week:

Adam Hewison of INO.com believes the gold market is getting wound up, ready to explode higher (check out his free video here). Long time readers know that I believe gold is heading much higher, because inflation is heading much higher.

Inflation is already through the roof – it’s just that we are not yet experiencing the effects of this newly printed money, because the velocity of money has dropped off so sharply. Not that this has been any consolation to my wife – who I “protected” last July by shifting her entire 401K into gold stocks. I may have hit the exact short-term top in gold stocks.

I think Bernanke is fighting the wrong battle. As a student of the Great Depression, he’s working to prevent deflation at all costs. And in the end, I think he’ll be successful – and bring us a true inflationary nightmare.

Grains Still Rangebound

The grains were off a bit on the week, but still holding above the near-term resistance levels. We continue to hold, with stops set at our customary 15-day lows.

Cotton Down Slightly

Cotton dropped a bit over 1 cent this week. I’m not particulary concerned – this slowwwwwww developing uptrend still appears to be in place.

While demand for cotton is taking it on the chin, cotton supply seems to be taking an even harder fall. The Commodity Research Bureau projects that global cotton output will fall 7.4%, which outpaces the 6.1% year over year fall in global cotton consumption the USDA is projecting.

Open positions

Date Position Qty Month/Yr Contract Entry Price Last Price Profit/Loss
01/16/09 Long 1 MAR 09 Corn 374 3/4 378 1/2 $187.50
01/20/09 Long 1 MAR 09 Corn 397 1/2 378 1/2 ($950.00)
12/31/08 Long 1 MAR 09 Cotton 48.52 49.50 $490.00
01/13/09 Long 1 MAR 09 Mini Soybeans 987 1/4 981 1/2 ($57.50)
01/13/09 Long 1 MAR 09 Mini Soybeans 989 1/4 981 1/2 ($77.50)
Net Profit/Loss On Open Positions ($407.50)

Account Balances

Current Cash Balance $39,223.08
Open Trade Equity ($407.50)
Total Equity $38,815.58
Long Option Value $0.00
Short Option Value $0.00
Net Liquidating Value $38,815.58

Cashed out: $20,000.00
Total value: $58,815.58
Weekly return: -5.3% 🙁
2009 YTD return: -23.6% 🙁

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

Initial stake: $2,000.00

(Had to add these historical facts in to keep me from smashing my head into my keyboard).

***”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.