My Home     About Me

0001 EST Monday January 30 2006 Vol 16 Issue 019

Good Morning: Once upon a time, back at the turn of the Century in late 2000, we ran into a nice lady from Los Angeles California trying to make it in this World, just like we all try to do, each and every day. She had a sad tale to tell: She had just lost Fifty Thousand Dollars Day Trading the S&P in some kind of scheme and asked for our help to try and convert the small amount of funds she had remaining and help her recover some of her losses. Being the kind of cautious investors and counselors we are, we certainly did not steer her back into the S&P, which can be notoriously volatile and is definitely not for the faint of heart. And frankly, trying to climb back out of a deep trading abyss of losses like those she suffered takes a very rare and special kind of discipline, will and tenacity that few human being's possess.

So, after a great deal of thought and not wanting to put this poor unfortunate investor through the ringer any further, we suggested that she buy Cocoa Options and or Futures, as it occurred to us at the time, that Cocoa was trading at near 30 year lows and therefore, there was some degree of confidence that Cocoa Futures in time, might indeed rise and help this gallant lady, at least get some respite. The reason we suggested Cocoa Options, was because, ever mindful of the risk that investing in Futures can involve, and also mindful that the risk of tying to pick the bottom of the Cocoa market... If memory serves, led to some $40 Million Dollars in losses by very long respected and legendary author Paul Erdman, (The Billion Dollar Killing etc and brilliant out of the box thinker and columnist for CBS Marketwatch).

Paul Erdman was dead right about Cocoa's outlook and future, just like he is about most things... His timing was just a little off: In one of the most stunning reversals of all time, Cocoa Futures recovered from a plunge that Erdman himself probably created as his positions in all likelihood were probably unwound and force liquidated, Cocoa prices soared from a low of $210 per ton in 1965 to $5,379 by 1977. If things had gone just a little bit different, Paul could have potentially made his own Billion Dollar Killing that he eventually wrote about. The reason we are telling you this story is because what happened with Cocoa has implications for Gold, Silver, Platinum, Palladium, Copper, Oil and a horde of Commodities and Resources that are going to influence our futures beyond anyone's imagination in the coming years and Jim Rogers has written a book called "Hot Commodities", which to his credit gave investors a very early heads up to current events...

You see, unbeknown to us at the time, Cocoa futures were just beginning to rise in November 2000, from a low of 650 to a stunning high of 2,405 just 20 months later, in a move that could have made our cornered lady friend a tidy fortune and potentially recover all her losses. Alas, her response to our suggestion was: "You want me to invest in Commodities"? No way that's way too risky: I'll stick with the S&P.

More about why Cocoa rose so suddenly and so sharply back in 2001 and its potentially awesome implications for precious metals soon and why Jim Rogers has been so on the money this far, he's been almost psychic. So, why many have feared to tread in commodities as our gal also feared they may've turned their backs on some truly awesome potential winners as we are in a secular bull trend of 25 years.


Sugar, Gold & Silver: A New Series of Cocoa's in the Making

Ok. Perhaps due to a lack of understanding and having taken a shellacking, nothing other than an absolute "sure thing" would have been good enough for our friend and the psychological devastation of being afflicted by what happened needed mental amnesia to recover from.

The lesson here is: Never leave any stone unturned, when it comes to investing. Remain alert. Pay attention and explore and examine all options and possibilities that are presented, no matter how wacky they may appear to be. Investors who have been following our MODAR service will know that we have recommended Sugar on numerous occasions over the past year almost to the day we started MODAR and even though we have done a lousy job of not being more forceful in explaining the potential magnitude of Sugar's rise ahead of time, we have expounded on this in various radio interviews and other commentary explaining how Splenda was behind the revival in World Sugar.
Meantime, Jim Rogers was helping out, because again to his credit, he has been ever pounding the table on Sugar on business shows.

But that is only half the story: Folks take a good long, no, very long look at the March 2006 CEC Sugar Futures Contract Chart and keep, it in your mind. Frame it. Put it on your fridge, above your bed and around your office, because mark our words as of January 30 2006, we earnestly believe that Gold and Silver are destined to emulate this chart if not exceed it. Sugar is a leading indicator of inflation and as of Friday, Inflation futures were screaming to and closed at: "New All Time Highs". Look at when Sugar started taking off from a long and base building consolidation since early 2004 that is notoriously similar to the base that Gold and Silver have been building prior to liftoff...

Gold actually bottomed in 2005 around the same time, but it took a while before it really got going, but the fact is Sugar is running several
months ahead of Gold and the way Gold, Platinum and Silver have been following Sugar higher, may mean now mean that Sugar has finally regained its 1970 stature as a leading indicator of inflation and Gold prices and given the propensity for Sugar in an inelastic supply demand scenario such as is also now creeping up on Gold as demand outstrips supply by a near 1,500 Tons per year margin, the unreal implications for Gold prices is that they could begin to emulate Sugar's near vertical price rise of the past few weeks as both of these fine tuned performers begin to set their sights on previous all time record highs. In Sugar that is 66 cents... For Gold $875 and Silver $50 oz. Platinum, another leading indicator, is already setting new all time record highs, closing the week near its highs at 1,072.7 and we don't believe the Bull market in Gold will end until Gold prices are equal or higher than Platinum and by then, Platinum could be over $2,000 oz.

Back to the Cocoa market. Why did Cocoa suddenly reverse and begin soaring in early 2001? It was because early rumblings of unrest and the threat of what was about to become a horrendous Civil War in West Africa and the Ivory coast would mean a severe disruption of supplies would eventuate and prices soared spectacularly up some 400% for two years and on a futures basis, about a $4,000% gain...

Trade Well
From the Desk of Savant

Basic Materials sector   Technical chart patterns   support/resistance levels   ETFs (exchange traded funds)   Deron Wagner   iShares Hong Kong (EWH)   S&P 500 chart pattern   emini's S&P 500   earnings   economic data   Biotech HOLDR (BBH)   Emini's Nas 100   Short selling ETFs   exchange traded funds   sector rotation   etfs   corn futures   selling options   commodities   mcio