Monday, February 16, 2009

Successful Gold Investing in 2009

Most of us know that gold investing is going to be not only a place to safely put our money in 2009, but also a place where we can make significant returns on that money. There are a lot of ways to invest in gold, like gold stocks of mining and gold production companies, companies selling gold coins, gold futures and gold ETFs, among other ways. Here's a few ways to invest in gold in 2009 that should do very well.

Gold investors should be able to put their money into any well run gold mining producer this year and do well, along with investing in gold futures, which will continue to run up. Other gold investments set to do well will be gold ETFs, which with the larger companies are saying they're having no problem acquiring the needed gold to line up with investors' demand.

Regardless of whether or not gold goes up or down from here, there is a great opportunity to capitalize on such movements of price by using the right trading tools. There are many trading tools available to trade gold such as gold ETFs (exchange traded funds), mining stocks, gold futures and options. But perhaps the most significant way to monetize gold is by using the incredible leverage available from a forex trading platform.

Many forex (foreign exchange) brokers empower clients to trade gold with 100:1
leverage. The 100:1 leverage system follows easy to understand strategy. For every $100 one risks, the trader will get the buying power for trading gold worth $10,000 dollars. There are other things that can be traded too on this platform including silver, crude oil and just about every major currency on the planet. Standard trading accounts which offer the ability to trade gold forex can be opened extremely fast online with a very low investment of several hundred dollars, often with the simple use a credit card for making an opening deposit. For those just starting out there are also forex practice accounts which can be opened without risking any of your money.

A practice account is a great way to get a feel for the forex platform and enable you to trade in very much the same way as a real cash account without facing any risk, until you understand how it works.

What remains to be determined is how long it will take, not whether the time arrives. But either way, gold is going to break out again this year, and most analysts are forming a consensus that gold prices will push past the $1,000 barrier before 2009 is finished. And I think they're right.

Gold futures will also remain a key way to successful enter the gold market, as they don't depend on the management ability of a company or how much debt they have incurred, among other factors. Futures just measure gold and its demand itself. That makes it simple and easy to watch to see which way the market is moving. How investors measure safety and inflation is a big part of how the gold futures market performs.

Buying gold coins is one of the most practical ways to own physical gold, as gold bars are more difficult to transport and keep out of view. If owning physical gold is part of your gold investment strategy, I would buy gold coins rather than any other type of physical gold.

There's no doubt gold investing will be one of the main investing success stories of 2009.

Saturday, February 7, 2009

Commodities: Silver - Prices Going Up

The current economic crisis has people faltering a lot concerning their money and what to do with it, and the usual havens of silver and gold during times like these haven't been acting in the usual predictable manner, but prices of silver and gold are starting to rise, and that should go on for some time.
Most of that has been because of the forced liquidation period where companies sold off their silver and gold positions, among other commodities, in order to get their hands on much needed cash. That in turn caused the U.S. dollar to remain inordinately high even though the underlying fundamentals pointed to it being weaker.

When it comes to commodities, don't get fooled or confused about the current economic situation where all the various market forces seem to be makeing it hard for people to make sound decisions on where to put their money.

Gold and silver will start to perform strongly again as the forced liquidation period unwinds, and investing the gold and silver will be very profitable going forward. The one thing about silver prices that are nice is they are lower than gold, and so investing in silver has a much higher probability of moving much more up in percentages than gold. Of course it depends on what your investment risk comfort zone is, as if you're just trying to hold on to your money, gold during these times should be the preferred investment, even if silver futures and prices have a better chance of going higher.

To me there's no doubt silver prices across the numerous ways of investing in silver will move upward significantly in 2009, no matter what the demand for its use as a raw material. Safety is one of the key factors in investing this year, and commodity prices like in relationship to silver and gold prices will be the safest and probably best investments as well in the near term.

What are some of the many ways you can invest in silver in 2009 and beyond? There's of course silver futures, silver bar, silver eagle coins, silver dollars, silver coins in general and silver bullion, among many others.

The key now is to understand fear will drive the market for some time, and gold and silver prices will rise as a result of that fear, whether its deserved and accurate or not. We don't have to figure that out, we just need to know that silver prices will rise going forward, and keep that in mind as make our silver investment.

Some people are even concerned about their safety, with the idea that things could fall apart. To that end their not only buying silver and gold coins, but silver and gold bullion as well.

So silver as an investment, no matter what form you want to buy silver in, will do well for those interested in buying commodities, and will be among those commodities prices going up. Silver, along with gold will be safe, and give a return as well; something not many other investments will be able to say in 2009, and probably even 2010.

Many people are asking which way silver prices are going, and the answer is up, up, and up. The reason why, as mentioned earlier, is the safety factor and the winding down of forced liquidation by companies usually buying gold and silver in large quantities and futures at times like these.

Keep looking at the silver prices going forward, and don't wait too long before participating in buying up silver futures, coins, bullion or bars.

Silver prices and futures are going to continue going up in 2009, be in the silver market to enjoy that upward movement.

Commodities: Peter Schiff on 2009

Peter Schiff has come under fire for exposing the macro-economic weaknesses in the United States, especially the horrid policies of the Federal Reserve and the government bailouts.

Schiff has gained notoriety and confidence from people because he accurately predicted the collaspe of the housing market and credit crunch well before they happened, and is now projecting the collaspe of the U.S. dollar and the collapse of the bond market, which he thinks is already in a bubble that is ready to burst.

Some of criticized Peter Schiff for some of those investing with him losing money because the exact timing of things hasn't come about yet. But that's ridiculous when you really think of it, as there is no investor or financial advisor in the world that hasn't been wacked by the timing of the market, which those like Warren Buffet, Peter Schiff and Jim Rogers all recognize is impossible to do.

So when taking into account the insights of Peter Schiff and also Jim Rogers, we have to realize that the U.S. dollar will collapse. It's impossible for the government to keep the fiat money presses running and offer up trillions in bailouts without having to pay for that money. The only way they can do that is by printing it out, as other countries like China can no longer take on dubious U.S. debt, as they'll lose big time as the dollar falls in value.

What we need to do is plan in a way that takes the reality that the U.S. dollar will plunge in value. It's no longer a matter of if, only a matter of when. Whether it's in 2009 or not doesn't matter, we need to put our money in things that will not be tied to the dollar in any way, as it will be highly diluted.

A few things to keep in mind for 2009 are the surety that gold and silver will perform strongly, as there's very little else that could be considered a haven of safety for people's money. Also the oil contango or super contango provides an excellent opportunity for safe investment, and should be considered going forward, as the predictable oil futures market is extended beyond what it usually is, the reason it's now being called a super contango rather than just a contango.

Silver prices will probably outperform gold in 2009, when you take into account percentages, although gold is more the haven than silver will be, and probably safer.

Platinum prices in 2009 are a toss up to me, as there are market factors that could drive platinum futures up even though its use in the auto industry will decline. Gold prices have caused Indians who usually buy it in large amounts to start looking to platinum as an alternative as gold prices and futures continue to soar. So platinum prices could receive some support depending on how much demand comes from India, and how much platinum they buy in 2009.

Peter Schiff has the overall economic picture accurate, and so investing in the right commodities will be the most profitable over the next five to ten years. Even after the global economy starts to recover, and gold isn't looked to as a place of safety, then the growing middle classed in China and India will resume their buying again, and raw materials demand will soar, and the commodity bull market continue.

How will grains do in 2009? That is also a toss up in my book. The usual factors will have to be watched, as the recent drought in Argentina and also China has people concerned over the near future of wheat, corn and soybeans. The only problem this year is the harvest has been so successful and food so plentiful, that even with the weather challenges there's so much on the market that it's not offering fundamental support to increased prices.

You also have the economic factor to consider, as people continue to cut back on all spending, and are only buying the bare necessities in order to survive. That will change in the long term, but short term it will affect the prices.

So going forward, keep in mind the overall economic situation as mentioned by Peter Schiff. Those who invest in commodities and develop strategies accordingly, will hold onto their money, those that don't believe the economic situation as defined by Schiff will find themselves struggling to survive as the normal way of investing no longer will cut in over the next several years.

Commodities | Raw Materials Down in 2009?

A recent report from the Economist Intelligence Unit (EIU) says that industrial commodities will probably continue to fall in 2009 as the price index is projected to plunge by up to 41 percent this year.

On the other hand, in 2010, expectations from the EIU report says prices of the majority of industrial raw materials should bounce back in at least a limited amount in prices, although in the long term most investors and futures traders are positive about the return of the bull market in commodities.

In the auto industry, that continuing decline will cause natural rubber demand to fall even more, as synthetic rubber becomes more competitive in price (that'll last as long as petroleum prices remain down), and platinum, while expected to fall in demand in 2009, possibly pressuring platinum prices and futures down, there could be an override there from investors speculating.

The recent announcement that Indian consumers are migrating from gold to platinum may offer some support in 2009 as well.

Obviously gold and silver futures and prices should enjoy a solid year in 2009, as investors continue to look for the few places of safety available, as confidence in the U.S. slides as investors start to understand forced liquidation propped it up when it should have been falling, and now they're starting to flee it as they see the fundamentals and huge bailouts will continue to undermine its strength.

Availability of credit in the latter part of 2008 and early part of 2009 have also affected the movement of commodity stocks as financing has held back acquisition of raw materials in many cases and many companies.

Cutbacks by producers has also generated the possibility that supply may be more difficult to acquire this year, putting more pressure to meet demand and move the stock prices higher. Shortages could be a reality with some raw materials in 2009.

Demand for metals in the consumer electronics sector has also left demand down, and so prices are expected to be pressured down for metals used there too.

The one unknown question out there is how far along companies are in forced liquidation. If their positions are mostly unwound, base metals may be a little stronger than expected, although most aren't holding out much hope for 2009, and are looking for 2010 for the beginning of a modest recovery.

Some companies may have enough cash and credit lines available to tap, and so may do well, others probably will take longer, the reason its such a mixed commodity futures market at this time, and investors are being cautious.

That's also a factor with the U.S. dollar, which will assuredly contract and collapse some this year. Again, the U.S. dollar has benefitted from forced liquidation because of commodities being sold to raise capital which has artificially kept the U.S. dollar strong because of most commodities being dollar denominated.

With the ongoing recession across the world, there's little hope that oil prices and futures will rise any time soon, a reason the super contango has been helping the pocket books of those investing in it.

Investors are simply buying and storing oil in supertankers until prices start to move again. Their hope is obviously the storage costs won't outpace the price increase, however incremental they may be.

Because it's a super contango, the futures are much further out than normal, and investors can more easily make those decisions.

Although it's not quite here yet fully, the commodity market, as far as gold and silver goes, is starting to behave somewhat predictably again, as investors run to a haven of safety with their capital.

Other industrial raw materials and futures will struggle to go up this year in any meaningful way, and we can expect this behavior for the rest of 2009.

Friday, February 6, 2009

Indians Moving from Gold Commodity to Platinum

Indians gravitate toward platinum as gold prices continue to surge

Now that gold prices and futures look like they're going to rise even more in 2009, platinum prices could enjoy the benefit of the trend of Indian women migrating to plantinum in order to meet the demand.

Indian gold jewelry demand can't keep up with the surge in world Gold Prices right now.

THE SKY-ROCKETING Gold Price for Indian jewelry buyers has shrunk the volume of gold imports into India, reports Rishabh Vora for Commodity Online.

Demand for jewelry was already sluggish in November and December, but it simply vanished in January. However, Gold Investment demand has gained momentum here just like everywhere else as the Gold Price shot up to new all time highs.

The increasing price of yellow metal continues to hurt companies engaged in the jewelry making and trading trade – companies like Gitanjali Gems Ltd and Rajesh Exports Ltd here in Mumbai.

On the contrary, the share price of both these companies has fallen by 85% and more over the last 12 months on expectations that rising Gold Prices would have an adverse impact on their business.

Now this week, Gitanjali Gems – a leader in jewelry exports from India – just reported a fall in its consolidated net profits by 42% in the company's Q3 results. The fall in the profits were the fallout of the contraction in the diamond and jewelry segments of the company during the period.

The company witnessed a decline of 17% in its revenue from Indian operations and a 7.8% decline in its overseas operations during the quarter.

The outlook from here? According to Indian analysts, the current low gold-imports demand is mainly driven by people cashing in and selling their existing inventory or old jewelry. This has come even as Gold Investment demand has increased considerably.

Some Mumbai analysts believe that volatile investment demand driven by Gold ETFs could drive the Indian Gold Price up to a new high of 16000 Rupees per 10 grams in coming months.

Indian consumers turning to platinum jewellery 5th February 2009

Read more about the platinum group metals markets in Johnson Matthey's bi-annual reviews click here.
Demand for platinum jewellery is on the rise in India, according to a new report published today (5th February) by Reuters.

The country is famed for its love of buying gold jewellery - particularly for festivals and wedding seasons - but platinum has not been as closely tracked historically, with only a few companies importing bars.

However, a number of jewellers are now reporting a substantial rise in interest from consumers who are looking to purchase luxury pieces.

Sheetal Darji, a member of the sales team at Anmol Jewellers in Bandra, Mumbai, told the news provider: "Suddenly, the number of people coming and buying from my counter has increased.

"Earlier I used to handle one to two buyers daily, now the number has increased to four to five."

Those sentiments were echoed by Ishu Dattani, a partner at the company, who noted that sales have increased by between 20 and 25 per cent in the past six months alone.

Consumers such as Shweta Arora, a partner at an investment bank, are beginning to realise the value of platinum jewellery, whether it be for engagement rings, wedding bands or a present for a relative.

Contemplating purchasing a stunning platinum necklace, she told Reuters: "I wanted to buy a gift for my sister-in-law, who is a South Korean staying in the United States."

According to the news provider, Princeson Jose, Director of Princeson Jewellers, believes that demand will increase by a further ten per cent by next year.

India's local gold demand remained quiet on Wednesday as it traded above the psychological 14,000-rupees-mark in the midst of the wedding season, with scrap continuing to flow in the market, dealers and traders said.

"There is no much demand...there are no enquiries from jewellers as well," said a dealer with a state-run bank in Mumbai. "Volatility is keeping them away."

Traders said jewellers are unwilling to buy new stock due to the unsold stock lying with them in their warehouses.

"People are expecting prices to come down to $800-835 so that they can buy," added the dealer.

The benchmark April contract on the Multi Commodity Exchange (MCX) was 41 rupees higher at 14,030 rupees per 10 grams at 1:15 p.m., after hitting a high of 14,040 rupees earlier.

Gold is still available at a discount of 250-300 rupees compared with prices quoted by banks, signifying lack of demand.

Traders were also seen taking profits on the yellow metal, which they had bought at lower prices.

"Business is down by 80 pct," said Darshan Zaveri, director with Manubhai Zaveri Ornaments, an Ahmedabad-based bullion trader.

"Even we are selling gold at a discount (at the retail level)," said Zaveri, "but there are no buyers," he added.

MUMBAI: Lower prices has sparked demand for platinum in India, a country famed for high gold sales, and analysts and traders say, the demand is Investing in gold a safe bet
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likely to rise further in the near term.

A more than 37 per cent fall in Indian prices tracked a slump in international spot markets, where the metal traded at $977.00 an ounce at 3:20 p.m., down 57.4 per cent from its all-time high of $2,290 an ounce struck on March 4, 2008. Platinum is not a closely tracked in India as there are few buyers. Some jewellers import bars to make jewellery, and don't always peg the daily price to international rates.

"I got to know through newspapers that prices have fallen drastically," Shweta Arora, a senior partner at an investment bank said, as she examined platinum jewellery in a suburban Mumbai shop. "I wanted to buy a gift for my sister-in-law, who is a South Korean staying in the United States," said Arora, eyeing a glittering necklace. A 10-gram platinum ring was priced around 22,000 rupees as against 35,000 rupees a year-ago, said Princeson Jose, director with Princeson Jewellers, which caters to South Indian markets.

"Suddenly, the number of people coming and buying from my counter has increased," said Sheetal Darji, a sales girl with Anmol Jewellers in Bandra, Mumbai. "Earlier I used to handle 1-2 buyers daily, now the number has increased to four to five." Ishu Dattani, a partner at Anmol Jewellers, said sales have gone up by 20-25 per cent as compared to six months back.

"Clients have accepted the price decline very cheerfully, and they are buying more," said Jitendra Vummidi, a partner at Chennai-based Vummidi Bangaru Jewellers, who stocked a lot of platinum jewellery, said over the phone. "We are anticipating further spurt in consumer interest."


Platinum demand is expected to pick up further, said Bharghav Vaidya, a bullion analyst in Mumbai, but "platinum would be only restricted to cities." The prices too will not remain at current, attractive levels, but this could expand the tiny market for the white metal in the gold crazy country. "If the awareness of the price fall is increased, than we might have a huge base of market for platinum," added Anmol's Dattani.

India is estimated to have consumed 932 kgs of the metal in the fiscal year 2008-09, while the country imported approximately 400 tonnes of gold in the calendar 2008, according to the Bombay Bullion Association. "There is a probability of a rebound in prices of platinum, with $1,020 a good resistance area," said Harish Galipelli, head of research with Karvy Comtrade in Hyderabad.

The economic slowdown too will play its part in stifling demand, but the overall demand would increase by 10 per cent next year, said Jose. "If the prices remain at par with gold, then the consumption of platinum will definitely go up."

Platinum investors can take heart at this recent development, as auto sales and auto manufacturing doesn't look like it'll rebound any time soon, and finding a significant market for platinum in an unsuspected place is a potential great boon for platinum prices in 2009.

Thursday, February 5, 2009

Commodities: Trading Commodities

Just like in trading equities or any other investment, an investor without a long term outlook and time horizon will far underperform those that are in it for the longer term. Trading commodities is no different, as those going in and out of the market find themselves on the loosing end of deals, and wonder why other commodity futures traders are so successful while they linger on the sidelines licking their wounds.

It doesn't matter if it's trading currencies, agriculture futures or precious metals futures, it's all the same. Those measuring success in short term increments will find themselves never making any money, and only looking for someone to balme for their wrong decisions.

Commodities markets are no different than any other investment market, and we need to do our homework and have a solid handle on what commodity or commodities were investing in.

Whether its gold or silver futures, wheat or corn futures, or platinum or palladium futures, it's all the same. Understand what it is that relates to the underlying fundamentals and invest accordingly.

No matter what commodities exchange you're working with, commodities brokerage or broker, if you don't have a long term outlook and investigate the commodity or commodities you're interested in, you're going to fail miserably and not understand why.

Check out the commodity news and commoditey charts, look for patterns and changes in commodity demand and surplus. Look for any information on the commodity you're going to invest in, and make a decision on whether you want to invest in options or futures. You could in the case of ETFs of course go that route.

Commodity futures trading or commodity options trading isn't for the faint of heart, which is why it's even more important not to just throw your money at something hoping it will stick. If you don't have the time or are clueless, research commodity brokerages and individual commodity brokers to see which is the best fit for your desired strategy and risk tolerance. Also don't throw all your money into one commodity trade, as you could lose it all.

Over the long term, gold commodities, silver commodities, oil commodities look good for futures rising, while over the longer term a number of grain like wheat commodities, corn commodities and soybean commodities should perform well as middle classes grow in Asian countries.

Gas as a commodity investment should also do well over the long term.

The U.S. dollar is not a place you want to place your money, as over the long haul it's going to be under tremendous downward pressure, and other currencies would be better to invest in if you're interested in the currency sector.

Commodity funds, commodity investments, commodity indexes, commodity stocks, commodity exchanges, ETFs, commodities prices and so on, are going to rise, and will outperform in general all other investment vehicles and sectors over the next five to ten years. There will obviously be individual commodities that won't partake in that success, which is why learning to be a futures trader or options trader and understanding the overall commodity market in relationship to supply and demand is so important.

Taking a consistent look at gold as a commodity people are looking to park their money safely, as well as the commodity silver is a must going forward. Both of those should do well in the near and long term.

Commodities will continue to be hot, and those who prepare and are ready and willing to take the risk, should experience extraordinary success in commodity options, futures, funds and ETFs in the near and long term.

Wednesday, February 4, 2009

Pan American Silver to Raise Up to $103.5 Million

Pan American Silver Corp. has plans to offer a public offering which will initially raise about $90 million. There will also be an option for underwriters to acquire a second round of stock which would be valued at about $13.5 million, making the total raised for the silver company $103.5 million.

With the U.S. dollar ready to collapse, and places of safety for investors diminishing, precious metals companies, especially those primarily producing gold and silver are taking a number of steps to bolster their balance sheets in order to look good to investors.

Silver could be the biggest performer for investors this year, even out shining gold as far as percentages go. There are very few places to put your money safely, and silver and gold will be two of the best in 2009, and Pan American Silver knows it, and is making this move for the stated purpose of expanding and making additional acquisitions to strengthen its market position.

So far in 2009, silver is the second-best commodity as far as performance goes of the 19 listed on the Reuters/Jefferies CRB Index, which has helped Pan America Silver increase its revenue, giving it even more to work with going ahead.

In 2008, Pan American Silver produced around 18.7 million ounces of silver across its eight mines, all located in South America - in the countries of Peru, Argentina, Bolivia and Mexico. Pan American Silver Corp. has gained a healthy 40 percent over the last three months in its share price, and has a lot of room to grow even more.

Concerning the public offering, Pan American Silver has filed with the SEC in relationship to the public offering, and also has filed a preliminary prospectus supplement to its existing base shelf prospectus with the securities regulatory authorities in every one of the territories and provinces of Canada.

Managing the issuance of shares are CIBC World Markets Inc. and Goldman Sachs Canada Inc., whom will act as co-leads as well as joint book runners for the offering.

After their successful last several months, the market value of the company has risen to USD $1.47 billion.

Commodities: Choosing Commodities Futures Broker

Commodities over the next five to ten years will outperform the majority of other investments by a long shot, and so it's extremely important to understand the sector, how it operates, and the best way to invest in them. To that end, let's look at one key element involved in your successful entry as a commodity trader into the sector: choosing a commodities broker or commodities futures brokers.

Just so you don't get confused, you may hear a commodities broker called a futures broker, commodity futures broker, commodity or commodities broker, or a commodities brokerage. Either way, when you hear those terms and other forms of them, it's referring to those who can help you make decisions and execute the proper trades.

One key thing to keep in mind is you're choosing two things when looking a trading commodity options or futures. You're choosing a commodity futures brokerage company, as well as an individual commodities broker within that firm. Both are important decisions going forward.

Of course if you're experienced to a certain degree and understand the various elements of trading in commodity futures and options already, you could simply trade through an online commodity brokerage at very low prices per trade. But this article assumes you prefer to use a live human commodity broker, not the internet.

So what should be considered in making a decision on choosing a commodities futures broker? Like almost any other type of investing or business, you want to check into the length of time they've been in business, if there are any ethics violations that were substantial (in finance there will always be disgruntled people complaining when they lose money). I'm talking here about real ethics violations that are either criminal or show a lack of concern about the client. Also a commodity brokerage firm needs to be competitive on commissions, unless they've shown they have outperformed their rivals in such a way as to deserve high commissions. And lastly, you need to know what types of services the futures or options brokerage offers.

As far as ethics go concerning choosing a commodities futures brokerage firm, the best thing to do is check with the National Futures Association to see if there have been any disciplinary actions taken against the futures firm.

While this could happen to any brokerage company in general, it is in your best interests to ask your potential commodities broker to explain what brought the complaint and how it was resolved. Many times, as I mentioned, disgruntled commodity traders that lost some money complain simply because they lost some money.

One thing to be careful when checking out a commodities brokerage is the number of years they've been in business. If you check them out and find a clean record, all that may mean is the commodity brokerage hasn't been in business long enough to have the inevitable complaints that come against it.

So if you look for a futures brokerage that has been around for about five years or longer, you can be assured that they at minimum know how to run a business, and should have a track record of arbitration over complaints from clients. It's not that they have complaints that should worry you (as long as they're not in abundance) but how they handled the complaints and how the aritrators ruled.

Because some commodities brokerage firms can settle disputes before they are presented to the NAF, and so their complaint record could look "clean," you should perform due diligence with those you know who may be trading options or futures with the company, or go to industry organizations like the National Introducing Brokers Association to aid you in your search.

As far as commissions charged by a commodity futures broker, that's probably the least factor to consider when trading commodity options or futures. It may be more profitable if you're starting out in trading commodities to use a more experienced, and probably more expensive commissioned commodities brokerage firm.

When you learn the ropes and take care of doing your own homework, you could then trade with discount commodity futures firms which can save you a significant amount of money if you make a lot of options or futures trades.

One thing to be aware of in connection to commissions is in how the commodities brokerage or commodities futures broker handles the way they encourage you to invest or trade commodity options or futures.

There's a practice called churning, where the commodity broker continue to invest your money in options in order to earn commissions, and do little if anything to make you money. If you're charged above $90 for a round-turn, or even above $100, be very cautious of using the firm and trusting your money with them.

In most commodity investment firms you can get by with $85 a round turn or less, so go with them, as they're as reputable as any.

Another thing to look for with these types of companies is their fixation on commodity options, which require your money upfront and not on the backend. This is why these types of firms push you toward options, as they generate more money for them because of the upfront costs, so they don't have to wait for the backend.

You also get no possibility of margin calls or deficits because of the utilization of options. This doesn't mean investing in options is wrong or unethical, just that unethical companies push many people disportionately into the sector, and not much more than separating them from their money happens, as they continue to "churn" or turn over their money, gaining a commission each time the practice is enacted.

Although these types of commodity futures brokerages could be anywhere in the USA, the majority are on the east coast of southern Florida or in the Los Angeles region.

After selecting a commodity brokerage options and futures company, then comes the important part of making a decision on who your individual broker will be.

The two most important aspects here are experience and knowledge of commodities markets, and absolute honesty and integrity.

Because you should be looking at a long term relationship with a commodities futures broker, you should also fell like that individual is able to communicate well with you, so personality could be a secondary element of importance. The reason that's so important with a futures broker is even if you're doing farely well with you investments, you could start to have doubts if open communication isn't one of the strengths of the broker.

From there, make sure you communicate your goals and purpose for investing in futures or options, as they could even change from trade to trade, depending on why you're entering the commodities market.

Finally, in choosing a broker make sure they're knowledgeable about whatever commodities options or futures sector you want to invest in. You don't want him to be good in grains but not know about precious metals. You want him to be good in both if that's part of your commodity investing strategy.

So choose you commodity futures trading firm well, and zero in on the commodity futures broker even more once that is completely. Commodities are going to outperform other investment sectors in the years ahead, and those with a long term strategy and who do their homework will be much more successful than those that don't.

Tuesday, February 3, 2009

Commodity Futures and Fortunes

Commodities are going to be increasingly important in the years ahead; both as a hedge and as an investment. No matter what happens in the world, people will need raw materials and food, and that means the growing middle class in China and India, as well as other Asian countries, will drive a lot of the commodity futures prices in the short and long term.

That means that gold futures, oil futures, sivler futures, and commodities and futures of all sorts will be extremely profitable for those that do their homework and are patient in their commodities investments.

While there will always be commodities speculators in the market, those that are investing in commodity futures to make predictable profits, are those that have a long term outlook, which eliminates much of the price fluctuation connected to commodity futures and options coming from those speculators moving in and out of the markets.

Those investing in commodities in the short term run much higher risk than those looking at the long haul, just like those investing in equities. Commodity futures and options over the long term in the current global market have a more predictable pattern than maybe any other time in futures trading, because of the booming Asian markets which will need many things that it can now afford, in contrast to the past when the need was there but not the means.

Also benefitting now and in the future will be commodity futures brokers who will be increasingly looked to for advice in the realitively unknown area for most commodities trader wannabees.

Another potential beneficiary will be those in business who depend on trading in commodity futures to ensure they get their raw materials to operate their business, as well as lock in a price they can count on in the future.

While that could obviously backfire in the sense that the price could be less in the future than the commodity futures trader wanted, it still guarantees they'll receive their shipment if supply drops in relationship to demand, which the future pretty much guarantees.

If I was a commodity broker, I would be putting together some training or lessons that potential commodities investors just entering the market would find easy to understand. People overall don't understand commodity options and futures, so those commodity brokers ready and able to make it easy and simple to understand, will gain a lot of the upcoming commodity trading business that wasn't there before.

In other words, there's going to be a lot of new investors wanting and needing to learn how to trade commodities. The futures brokers ready for them will do a ton of new commodity futures and options business, and will do their clients a great service.

It seems most commodity futures brokers should be ready to explain the value of having a long term outlook concerning their futures contracts, and that the various forces that can impact prices make that a necessity for success over the long haul.

Those new to investing in commodities will need to understand that everything from weather, acreage, demand, scarcity and politics all play a role in determing upward or downward price movement in commodity prices.

With the U.S. dollar also ready to start plunging, it would be smart for futures brokers to be ready to put their clients' money into currencies that are ready to move upwards against the dollar, as well as into gold futures which will assuredly skyrocket going forward. Silver futures and oil futures should also enjoy upward movement for some time.

So looking ahead, those businesses, brokers, investors and farmers connected to commodities should enjoy unprecedented prosperity. Like anything else though, those best prepared and who have done their homework will be the most profitable in the ongoing commodity bull market.

Whether it be oil or gas futures; gold and silver or other precious metals; grains or livestock; currencies like the yen or yuan; or if commodity trades are done on the internet or whether you're a broker, farmer, or investor, those participating in trading in commodity options and futures from whatever side of the sector, should be wildly successful and build significant wealth and fortunes.

Commodity investing and futures trading demands discipline and courage, as well as doing your homework. No matter what part you play in the overall field, be ready for the raging commodity bull market about to ramp up again, as the raising middle classes in Asian countries look to raise their standard of living by the increasing demand they're able to afford.

From mining companies, farmers, business owners and countries, those best prepared and ready to run will enjoy extraordinary success as demand for raw materials is the largest it has ever been in the history of the world.

So we need to be prepared from whatever place we're in in relationship to investing in commodity futures and options, and watch as commodity prices surge as unprecedented demand carries everyone to heights they never imagined.

Those with long term outlooks and prepared for the upcoming period of time will be those benefitting most from the trading of commodities, including the commodity brokerages, brokers and businesses hedging their bets and locking in predictable prices and product they can make future plans with.

Commodities traders and investors will be the largest group of the wealthy in the years ahead, and will out perform all other financial sectors overall. Commodity prices will rise, and so will the wealth of those having the guts to grab the future which is assuredly coming.

Monday, February 2, 2009

Commodities: Peter Schiff Dismantles Detractor

There's been a lot of buzz around the internet recently concerning a defective attempt by a small money manager and small man to discredit Peter Schiff because of some things he alleges Schiff missed for his clients, effectively costing them a lot of money. There were even implications from the financial midget that Schiff was a fraud. It's hard to believe this little person is actually allowed to manage people's money. I won't mention his name so he doesn't get any more attention.

What this small time clown did was accuse Schiff of missing a number of assertions he made, making it look like he was so far off he was either a fraud or incompetent.

Of course the usual few disgruntled investors that lost money over the short term are doing their whining and complaining that they should have kept their money in some type of safer investment. But if anybody has done even their basic homework, or did due diligence on Schiff, they knew he's in things for the long term, and those investing with him should take that into consideration when employing his services.

Look for example at Warren Buffett and Berkshire Hathaway (BRK-A). In the middle of September 2008, the stock surged to over $147,000 a share, and as I write was only a little over $89,000 a share. That's a huge loss of $58,000 a share in a very short time. Does that mean that Warren Buffett has no idea what he's talking about, or that his long-term philosophy of investing is faulty? No one with half a financial brain would say that.

The same is now happening with Peter Schiff, because he has in the past correctly identified the problems of undergirding the U.S. economy and its horrible government interference which undermines its strength. That infuriates those that hold to the goverment as a religion, and certain dectractors then dishonestly and desceptively put together fairy tales and half truths to make people like Schiff look like they're incompetent and frauds.

Here's how Schiff obliterates the midget:

"The crux of the blogger's arguments are that my beliefs in "decoupling, hyperinflation, and that the dollar is going to zero" have been completely discredited by the events of 2008, and that the resulting investment losses suffered by my clients last year confirms the fatal flaws in my approach.

"In addition to mischaracterizing many of my beliefs, he also is confusing short-term market fluctuations with long-term economic trends.

"First of all, the hyper inflation issue is a straw man at best. While I often talk about the possibility of hyper inflation, I have always said that it would be a worse-case scenario that would play out over many years. The fact that it did not appear in the first year of the economic crash (2008) does not invalidate my position. I have always maintained that this worst-case scenario will likely be avoided by what will ultimately be a dramatic shift in policy once our leaders come to their senses. However, until then the dollar will likely lose a substantial portion of its value.

"Second, I never said that the dollar would go to zero, either in 2008 or any year thereafter. I have said that in the event of hyper inflation the dollar's value would approach zero. My actual forecast in my book "Crash Proof" was that the Dollar Index would fall to 40 (currently about 85), with a realistic worst case scenario, assuming very high but not hyper inflation, of 20 or lower.

"Third, the blogger points out that because the decoupling theory (foreign economies improving while the U.S. falters) that I wrote about in 'Crash Proof' has yet to occur, that the theory itself was ridiculous. In my book I wrote that this process would not occur overnight, that initially our creditors would come to our aid, and in so doing our problems would become manifest abroad. I wrote that it would take time for the world to realize that what had been decoupled from the economic train was not the engine but the caboose. In fact, that is precisely the way it is playing out."

In the end, most of this is dealing with the long term investing horizon that the real successful investors employ. The other stuff is a smokescreen, as Schiff has shown.

I read the hit piece floundering financial advertisement by the financial midget, and found that that's all it was - an advertisement using Peter Schiff as the subject to draw attention to himself. In that sense he was successful. Maybe he should go into marketing rather than financial advising, as his short-term horizon will be a disaster for those following his pathetic "advice."

What he said was Schiff should have done better even though his assertions were correct. In other words, he was trying to say Schiff (and evidently himself) should have been a better market timer; something Schiff has repeatedly said he isn't.

This is the similar mentality of those wanting to bailout every poorly run sector in the U.S., saying they're too big to fail.

People that attack long term investors and outlooks, are those that falsely believe there should be no such thing as a bad year, and those advising clients need to make that happen.

But Warren Buffett has proven over his long investing career that holding to a long-term investing outlook far outperforms those that go in and out of a market, giving the illusion their clients are doing well because they may occasionally outperform their long-term counterparts over the short term.

Remember those laughing at Warren Buffett during the dot com era? Do you hear them laughing now? Buffett was again exonerated for his long-term outlook and understanding of what he was doing.

As Schiff says, this financial midget is only trying to make a name for himself by focusing on the little short-term gains some of his clients may have made in contrast to Peter Schiffs' clients.

In the end, Schiff will be the one laughing, and those people made out to be the ignorant people they are.

Commodities: New Jim Rogers Fund China

Jim Rogers has combined two of his favorite investment sectors in a new commodities index fund involving China and agriculture. He has teamed up with Australia's Macquarie Funds group to form the new Macquarie and Rogers China Agriculture Index.

With some commodities showing signs they're getting hot again, and food eventually being a major factor in providing for the masses, the new commodity index fund should be a great short and long term vehicle for investors looking to put their money in China and agriculture.

Well run commodities funds will do great in the years ahead, and the bull commodity market isn't near to coming to an end, even though the global economy has been sliding.

As an alternative investment, hedge funds related to commodities will outperform most investment vehicles on the financial market, and partnering with Macquarie Funds Group to provide a new hedge fund targeting China and its food market will be a winner.

Those wanting to put their money into commodity investing will find that the Macquarie and Rogers China Agriculture Index will represent agricultural commodities consumers in China primarily eat, and will track the basket of agricultural commodities through their index fund by focusing on food price changes.

The commodities fund was started in November, and gave a return of over 11 percent in December, doing better than most agricultural indices, and doing better than almost every stock market in that part of the world.

With that immediate success, the commodities fund was doing well enough to start to be heavily marketed by the Macquarie Group, the parent of the Macquarie Funds commodity index.

The food consumption habits of the Chinese people will probably be a bellwhether for food prices going forward, and so a index fund connected to Jim Rogers will do well in tracking the price fluctuations of food in the heavily populated country. It should rank among one of the top hedge funds going forward.

What will make the Macquarie and Rogers China Agriculture Index such a good place to invest in the hot commodities market is the way it tracks the components involved.

Most the current commodity index funds will use production or supply side factors as the key measurement which guides the performance of the top commodity hedge funds.

What's unique with the Macquarie and Rogers China Agriculture Index is it measures components by projected and current consumption of agricultural products in China.

Another benefit to those marketing and managing financial products to invest in, is the ability to create innovative products linked to the overall focus of the commodity index fund. How that happens is the exchange-traded futures contracts or commodity ETF future contracts it uses on physical commodities.

For Jim Rogers, this is a good opportunity to be involved with what he passionately believes is the key way to invest now and in the long term future. In the past Jim Rogers has worked with other groups lik Macquarie, but never in relationship to the Chinese market. In that sense, connecting to a hot commodity market like China with a agricultural raw materials fund will be a great way to profit for those interested in investing in a commodity or commodity index fund or ETF.

Jim Rogers recently said that the bull market that can be counted up over the next five to ten years is in agriculture, and of course that means China will be a major player in any commodity investment in connection to food, raw materials or agriculture. Rogers continues to be bullish on those two areas: China and commodities; especially agriculture.

He said one thing everyone can count on, no matter what happens in other sectors, is people will continue to eat, making agriculture a key part of any commodity investment portfolio.

While gold and silver have been looked upon as significant commodity investments for this year, we'll have to keep an eye on commodity hedge funds and commodity etfs that target agriculture. With agriculture prices plummeting in 2008, they will eventually turn around, and investing in a commodity index fund like Macquarie and Rogers China Agriculture Index should provide a good return when those prices start to go back up again.

Growth in agricultural demand will be interanational, and Asia and China is by far the fastest growing region economically and by population.

So those investing in agricultural commodities will enjoy solid profits for years ahead as massive demand for food continues, while over the short term valuations make the agriculture sector attractive. It's only a matter of when raw material funds start surging upward again, not if.

For December 2008, commodity funds were hot in contrast to the stock markets, and did much better than their counterparts. That will continue overall in 2009, as demand for grain and food continues to surge.

Much of the strategy for the new commodity index fund of tracking consumption patterns in China should make investing in hot commodities like agriculture beneficial to investors. Consumption patters are believed to be the key by the index fund, and tying in to the eating habits of the Chinese people should help it perform differently and better than their competitors; at least that's the hope, and it has a good chance of doing just that.

Consumption habits of the Chinese should be the key influence in connection to food prices around the world, and so the Macquarie and Rogers China Agriculture Index is made to move with that expected reality.

This should be a winner for Jim Rogers and Macquarie Funds, as their commodity index fund competitors are big players such as Citigroup's Japan's Nikko Asset Management unit, JPMorgan Chase & Co.’s (JPM) JF Asset Management division, ING Groep NV (ADR:ING), and Schroders PLC. This gives commodity index investors a real option and the ability to invest in commodities in a way that differentiates from the usual way of commodity funds tracking mechanism.

Jim Rogers of course has been a big player in the markets for years, primarily being discovered for his connection to The Quantum Fund and George Soros. He's also inked several books including the popular "Investment Biker" and his recently released "Bull in China."

If this new commodity index fund performs even close to the hot Quantum Fund, it'll be a huge success for Rogers again, as well as investors. Over a ten-year period the fund exploded for gains of around 4,200 percent, while the Standard & Poor’s 500 Index performed at a paltry, approximate 50 percent.

While food prices fell in the last half of 2008, that's probably going to change when the economy turns around and people start to spend again. When that happens, commodity index funds and commodity etfs will be major players in the success of investors for a long time to come.

This new fund in relationship to Jim Rogers will play a significant role for those investing in commodities and the hot commodities hedge fund sector.

Sunday, February 1, 2009

Commodities: Peter Schiff - Financial Advisor?

It's funny to hear some of Peter Schiff's detractors attempt to make him seem fooish in the light of his growing popularity, as he predicted way ahead of time the market meltdown and the collapse in the real estate market.

Now that investors have started flocking to him for advice, every move he makes that wasn't correct as far as the timing goes, is being presented as evidence that he doesn't understand what's going on.

While that's not a true assessment of his situation, as market timing is known to be a foolish way to think of investing in the first place, and I doubt Schiff has attempted to do that with those looking to him for advice.

What has been the financial advice given by Schiff? Get out of the U.S. dollar and put it into other currencies like the Singapore dollar and Swiss franc. He's also advocated buying precious metals and foreign stocks which pay a dividend, especially commodities focused companies.

Already some of that investment advice is being confirmed, as gold and silver are starting to break out, and the US dollar struggling to hold its strength.

One thing that Schiff does seem to have not been able to project (but neither has anyone else), is the period of time it would take for companies and funds to deleverage and the length of the forced liquidation time period.

That, more than anything, was the major reason behind some of the length of time it has taken for these projections to happen.

For example, the US dollar has been artificially kept high, as people thought it was because it was considered a haven for their money. I don't think that's the case at all. What it was was funds had to divest of much of their commodity holdings in order to raise hard to find cash. That was a cause of gold prices being held down when the usual trend would be to be the place of safety it usually is, which would have caused gold prices to surge.

Now that it seems much of the forced liquidation period is behind some big funds, they are starting to put their money back into gold, and the price of gold has responded accordingly.

What has been the explantion of Schiff concerning some of his advice that seems to have been vastly wrong? Schiff said that he is able to see things clearly in advance, and so when he says what he says, things may not happen right away, and take longer to pan out.

Is this just a failed investment advisor making excuses? I don't think so. When you are an expert on macro economics, you do see the big picture much clearer than the usual investment advisor, and so could definitely make the proper assessment without nailing down the time frame.

That's why investors must take all advice from a financial advisor with a long time frame in mind. There's no doubt the U.S dollar will collapse in price. There's no doubt that inflation in the U.S. will soar as billions, and even trillions, is being committed to horrendous bailouts of poorly run companies in the name of "being too big to fail."

Someone will have to pay for those bailouts, and since foreign countries are seeing the imminent fall of the US dollar, they're not going to buy any type of Treasury bond to shore up the people of the United States at the expense of their own.

American consumers have stopped spending, and so to invest in America's debt without getting anything in return through consumer spending on their products isn't going to happen. At least it isn't going to happen the way it has in the past.

So as far as Peter Schiff goes and his investment vehicle Euro Pacific Capital, he's working on getting a license to be a investment advisor. He's been a broker inthe past, but he want to be an active manage of his clients' money.

Already Schiff has hired analysts through Euro Pacific Capital to start doing their own independent research.

This could be a very opportune time for Schiff, as along with Jim Rogers, he probably understands the overall macro economic situation as well as anybody, and over the next several years it should play to his knowledge and strengths.

So now that Peter Schiff is becoming a significant financial celebrity, where is he going to go from here?

You could imaging "Peter insurance," "Schiff capital, financial advisor, investment advisor, Schiff's financial services. Who knows?

One thing for sure, he had the macro economic picture almost completely right. The only legitimate complaint is the short term picture stood up longer than Schiff expected, and so his detractors and competitors are trying to drive that wedge between Schiff and potential clients, as they swarm to him and away from them for advice ... and their dollars.

If Schiff does this right, he could very well become a financial household name similar to Warren Buffett. But he'll have to prove himself over the long term, and if he can keep his short term projections under discipline, he should do very well for investors over the long term.

This isn't the last we've heard from Peter Schiff or Euro Pacific Capital. Commodities will continue on their bull run, and those running with certain of those commodities should do great in the future.