
Because of bust conditions in China, I would avoid any commodity where it consumes more than 30% of world demand ["Eye on China"]. That higher percentage would primarily be base metals. Even so, note that commercials are now long copper, which suggests China may be set to loosen monetary policy. I have differentiated silver because China is shifting its model toward targeted industries, where silver and rare earth elements (REEs) are used. I see silver as having a combination of both monetary and new industrial revolution value, in which the latter is under-appreciated. I now favor silver ["Currency Wars"], REEs (post on this to follow) and grains, but the first two are falling knives and part of the correlated, undifferentiated and increasingly absurd risk-on trade, and must be timed. It must be stated up front, that none of these investments are really safe havens, which is why (unlike others) I have not been a buy-and-hold perma-bull on these generalized commodity trades.
I think the topic of oil will be dominated by Iran and the Strait of Hormuz ["Strait of Hormuz Black Swan"], the latter which could erupt in conflict at any time. If it does so before the launch of GDP targeting, then the Fed’s hands may be tied. If it happens after GDP targeting, then the result will be both extremely inflationary and contractionary, unless the Fed immediately relents. Failure to relent would be catastrophic.
Iran’s response this weekend to U.S. sanctions that Obama just signed:
Reuters - “Iran has successfully produced and tested fuel rods for use in its nuclear power plants, state television reported on Sunday, in a snub to international demands that it halt sensitive nuclear work.”
BBC- “Iran has successfully test-fired a medium-range surface-to-air missile during military exercises in the Gulf, the official Iran news agency reports.”
On the subject of gold, I suspect banksters will loot the gold of Italy and the IMF as part of privatizations and collateral schemes. Italy holds 2,451.8 tonnes of gold – the third highest of any central bank in the world, but only enough to cover about a 10th of its debt. A swap of debt for gold would only buy Italy a little more time. The International Monetary fund also has reserves of 2,814 tonnes, which can also be fessed up for fresh “funding” to throw into the debt- trap pit. Add Portugal with 382.5 tonnes of gold and Spain with 281.6 tonnes and you have 6,000 tonnes of gold that can be looted and moved. The U.S. is a big plum with 8,133.5 tonnes, but I think it will somehow end up selling its gold at higher prices than European countries, if at all. Therefore, it’s important for the bankster cartel to steal the gold as cheaply as possible, before prices to take off.BBC- “Iran has successfully test-fired a medium-range surface-to-air missile during military exercises in the Gulf, the official Iran news agency reports.”
The same is true of other national assets, which is why I think LTRO was set up ["LTRO: Peak Bankster Heist"]. I don’t see these national holdings transactions going off at higher prices. In other words, the theft of gold will be complicated and suppressed, at least on the surface. China also wants the gold, so I see it generally being divided up between that country and the international bankster cartel as part of “debt restructuring.” At that point, once the cartel has the loot in hand, gold ought to take off again.
That said, it is significant that the speculative positions in most commodities has been liquidated. It looks generalized and highly correlated, like some computer switch went off without differentiation. In a few, such as wheat, they have gone short in a big way. Given my view that future weather patterns and soil degradation are set up to be dicey at best and disastrous at worst [Hitting the Food Wall], it makes sense to position alongside commercials when the opportunity presents itself. I discussed this here in early December and suggesting accumulating GRU. In the case of the grains, sure enough the moment weather began to impact South American crops, the grains started to rumble and GRU has packed on an 8% gain in a few weeks. I’m going to add another 1% to my ag holdings — this time using RJA, which is a more diverse basket of grains, softs and meats (list here). The set up is a little pull-back to 8.88.
Source : NOAA

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