September 11, 2018
WE HAVE EXITED OUR GOLD AND SILVER SHORT POSITIONS
While I believe both Gold and Silver ultimately will be trading much lower, I see the odds of a sideways move in both markets as having become quite high…and therefore now prefer to be on the sidelines here. WE HAVE THEREFORE LIQUIDATED ALL OF OUR SHORT POSITIONS IN GOLD AND SILVER.
I CONTINUE TO RECOMMEND SHORT TREASURY BONDS
Treasury Bonds have been frustratingly sideways for almost the entire year, to the extent that I recently considered throwing in the towel on my short positions…BUT…With the USA and World economies all cranking out STRONG numbers, and with unemployment nearing historic lows, I think the prospects for vigorous loan demand (from everywhere) are monstrous…AND with both wage and raw material INFLATION having become EXTREMELY likely, my guess is the odds have gone through the roof that Bonds are FINALLY primed to make one of their quite normal 15-20 point moves…ON THE DOWNSIDE.
Put that together with the fact that Bonds “hate” inflation, and fiscal irresponsibility from Congress (lowered taxes and increased spending?)…and I DON’T THINK THIS MARKET CAN NOW DO ANYTHING BUT GO DOWN…
Treasury Bonds are, as of this moment, in the low 140’s. I THINK THE 2-3 POINT SELL OFF WE HAVE SEEN IN THE PAST WEEK OR SO IS THE BEGINNING OF A MOVE THAT WILL TAKE BONDS DOWN INTO THE 120’S…BEFORE WE GET TO YEAR END… AND I AM STILL AGGRESSIVELY SHORTING THIS MARKET.
Here’s one way to do it…right here, right now…
Still Recommend SHORT CORN & SOYBEANS
It still seems like ALL I hear from everybody in the ag analysis business is some version of, “The bottom is right here somewhere”, and virtually nothing about where both markets could be headed on the downside…and I therefore continue to think there is still MAJOR potential in being short here. Nobody wants to hear it, and maybe I am just dead, dead wrong, but I think $3.00 Corn and $7.25 Soybeans both look quite possible within the next few months.
Here’s what I’m doing in December Corn…
And here in November Soybeans…
I would add that we do have a USDA crop report tomorrow, which often results in extra volatility, so the options I have noted here may be quite different come noon tomorrow…in either direction…But WHATEVER the report indicates, I still want to be short.
Still think Cotton could go BIG on the upside
As I noted in a recent newsletter, several months ago, with Cotton pushing 95 cents, just about every cotton analyst on the planet was talking Cotton up in the $1.10-$1.20 area (at least)…But now that we’ve set back into the low 80’s, just about everything I see and hear is preaching “caution” and “sideways to lower from current levels,” precisely when I think this market is primed to take off on the upside…And I therefore continue to recommend buying Cotton, but religiously using the 2 &1 (as I obviously might be dead wrong), with my expectation being that Cotton COULD trade THROUGH the top of the chart shown below. Cotton can get crazy as it really is quite a small market, and does, I believe, sometimes get manipulated…to the extent that stupidly big, fast moves are sometimes the norm…Bottom line is I think 105 could be easy from here…maybe just for starters…At any rate, I see this as a great both sides situation…as the last thing I expect now is sideways…I say it’s going SOMEWHERE…and my guess is it’s going to be up.
Give me a call if anything interests you here…or just to say hello.
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Treasury Bonds, Corn, Soybeans, Cotton.