186 Year Old Trading Strategy for Gold?
The gold market has really been something…hasn’t it? You couldn’t get a better ride on a Coney Island roller coaster.
My trading range chart aside (vbg)… the best trading strategy that I’ve been able to find for gold - is now over one hundred and eighty six years old.
You won’t see it on Kitco. Not on Gold-Eagle either. And you won’t find it on 321gold.com. In fact you won’t find it anywhere on the permabull sites. The only place you’ll find it – is in the history books, because the strategy behind the trade is now over one hundred and eighty six years old.
You heard me right.
….over 186 years old.
How could that be?
Simple.
You’re a believer in the old adage that – “those who fail to learn from history, are destined to repeat it” – aren’t you? Well one of the great strategic thinkers in history died in 1821. He was a militarist, an incredible thinker, and a brilliant strategist. And one of his most effective tactics is the basis of “the perfect strategy” for the gold market and perhaps for the entire financial market in this present environment.
But, before I get to that… I’d like to share some - chatter…
I said that I’d share a trade with you that I felt compared favorably with the swap out of gold and into palladium and silver in September, 2005. In that trade, palladium nearly doubled and silver blew the doors off of gold for six straight months. This is another commodity trade… one that is not quite as fundamentally cheap as was palladium, but one that perhaps more resembles the coiled spring bottom that was found in silver.
It’s another commodity trade.
But, it’s not a metal.
It’s a trade that anyone can make with a little effort. Not one to bet the farm on…but, one to certainly begin doing some research and due diligence on. And if you like what you see in the fundamentals and the technical’s (we'll discuss those in a minute)… just ease into it gently.
I know… I know… enough already. What the #@$% is it?
Well, let me tell you a little bit about it…
>> It’s a commodity that’s now down nearly 60% from it’s recent highs.
>> It’s a commodity whose demand is ramping – even as it’s price has corrected.
>> It greatly benefits from growth in China, India, Brazil and the emerging markets.
>> It’s also potentially a “call option” should Oil go parabolic due to global unrest.
By now I’m sure you realize what it is…
It’s Sugar.
It’s far from being my original idea. Jimmy Rogers has been pounding the table on sugar of late. And Emanuel Balarie, a name that many of you will recognize from Kitco, Gold-Eagle and 321Gold.com – has written two very interesting articles this year on Sugar.
In fact, Emanuel called it – “the new palladium” in his April, 23rd article entitled “Is Sugar The New Palladium? ” I’ll give you the links to both of Balarie’s articles at the end of this post. But, first let me talk about the “chatter” on Sugar.
If you watch CNBC…and if you’ve been in the markets for a few years, then you’ve noticed that many of the pundits like Jim Cramer, and the Fast Money crew – get many of their ideas fed to them by their cronies in the hedge fund community.
…you know – the guys who are behind all that mysterious insider options activity. The offshore pirates found on Carribean Islands, as well as the onshore pirates found at 85 Broad Street on the Island of Manhattan.
If you watch Fast Money on CNBC you’re no doubt familiar with Eric Bolling. Everyone knows Eric as one of the largest Natural Gas traders on the NYMEX, as a bull on gold…and of late – a bull on Sugar.
So why Sugar and why now?
Well, let’s take a look at the fundamentals.
Here’s the “World Consumption” chart for Sugar from Balarie’s article:
And here’s Balarie’s 3 year price chart on Sugar:
Back on January 23rd, Balarie had another interesting take on Sugar with an article entitled:
“Sugar and Corn – The New Oil of the Future.”
You can read it here:
wisdomfinancialinc.com
For what it’s worth… Emanuel Balarie and Gary Dorsch are about the only two commentators on the gold permabull forums that I read regularly. Being who I am…and being what I am – that should mean something for the permabulls (vbg).
Many of you may also recall that Balarie made the original call on Palladium back in the summer of 2005. We talked about it on here on SI. He may have been a few months early on the breakout call…but, he certainly nailed the longterm bottom.
And here again on Sugar… he has been a little early on calling the turn, but I think he’ll be right as rain once again on the fundamental value. Sugar has been cut in half from it’s early 2006 highs of $18-$20. And it’s fallen from the $12’s in January where Balarie first commented on it…and now looks like it’s trying to put in a double bottom in the mid $8 range.
You may want to wait until Sugar takes out the $9.50ish resistance level shown below…and then jump on board:
And on the subject of ”Chatter”…
You always hear Homeland Security talk about increases in “chatter” when monitoring Al Qaeda… well all I can tell you is this…
Among the offshore hedge funds… there is one helluva lot of ”chatter” about Sugar having bottomed…and it being one of few deep value plays left in commodities.
You’ve heard the same from Jimmy Rogers, from Eric Bolling, from Emanuel Balarie…and now me.
Do yourself a favor and take a look at Sugar.
Here’s the link to Emanuel Balarie & Wisdom Financials Web Site…
wisdomfinancialinc.com
And I almost forgot…
The 186 Year Old Trading Strategy for Gold…
Here it is:
”Never interrupt your enemy when he is making a mistake.”
-- Napoleon Bonaparte`
Think about it…
SliderOnTheBlack
PS: For those with a very high risk tolerance…here’ an interesting stock.
IPSU …. Imperial Sugar. It's a 164 yeard old, US based sugar refiner.
The hook… is that it's had between a 40-50% short position in it’s float since the correction in sugar from the $20’s to the $8’s.
If Sugar has bottomed… what’s going to happen to IPSU with a 50%ish short position?
High Risk & High Reward.
Not for widows and orphans...
Ciao~ |
