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XMFSinchiruna (26.57)

Taking the Pulse of the CAPS Blogs: Commodities



May 29, 2008 – Comments (14)

Well, now you've gone and done it!  You're all far too talented for your own good!  The quality and liveliness of the debate within the CAPS blogs regarding commodities lately was too good to pass up.  Also, my strong belief that this blogosphere is the best-kept "secret" in the online financial universe gets me excited to bring as many new players into the fold as we can.

So, as you can see, it wasn't so much a conscious decision to write an article about the blogs.  The material was simply so good that you made the decision for me.  As long as I'm handing out props, my thanks to ATWD Limited and Camistocks for creating the very convenient interim search tools that make diving into the blogs so much easier! 

Without further ado, here's a link to the article:  Taking the Pulse of the CAPS Blogs:  Commodities

My utmost appreciation to the bloggers whose posts were included in the article:  abitarecatania, drewbink, SaintCroix, podrag, and ATWDLimited.  There were many more I would have loved to include, space permitting.

It is my intention to make this the first installment of a regular series.  I may pose a particular question here from time to time, requesting your input.  Alternatively, when I see great debates taking shape on their own, I may repeat the process used today.

Keep up the great work.  We blog here for so many reasons... sometimes it might be a convenient way to keep track of our own thoughts and research on an issue.  Sometimes we have an idea or informattion that we think could really help our fellow members; and sometimes we pose questions seeking ideas from each other.  Whatever the case may be, we are accomplishing something that I think is a big part of the central idea behind The Motley Fool.  We are... investors helping investors.  I am proud to call this my financial home on the web.

14 Comments – Post Your Own

#1) On May 29, 2008 at 7:13 PM, goldminingXpert (28.80) wrote:

nice article. For what it's worth, I wrote a post today in which I announced my turn to short-term bullishness on the metals. I think silver and gold have suffered enough and that many of us shorts covered and either went long or will be waiting until prices go higher again before making any more bearish bets. You definitely should make the commodity sentiment breakdown a regular feature.

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#2) On May 29, 2008 at 7:28 PM, thepull (98.42) wrote:

Really good article. It would be more interesting to think about if it wasn't screwing with all of our daily lives though. As a drinker of high quality beer it is starting to hurt.

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#3) On May 29, 2008 at 7:37 PM, XMFSinchiruna (26.57) wrote:

gmxpert... Congratulations on climbing over to the correct side of the fence.  :)  Change the term short-term to long-term, and I do believe you will have undergone a complete transformation.  :)

Since you've given me the last word in each of our prior debates, here and here, I can only assume that I'm partially responsible for your reversal.  :)   [Just Teasing, but you can't escape without some ribbing for announcing you're long pms just 2 days after posting this]  :) 

As for the regular feature... I'm sure I will branch out and cover a range of topics, but whenever commodities are clearly at the forefront of players' thoughts and concerns, I will revisit the topic.

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#4) On May 29, 2008 at 8:14 PM, binv271828 (< 20) wrote:

Great article!
I agree with goldminingXpert, that is a really good idea for a regular feature.

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#5) On May 29, 2008 at 8:23 PM, XMFSinchiruna (26.57) wrote:

Thanks... binv... I must say it was practically a toss-up between the commodities discussion and your recent discussion of alternative energy technologies.  I oved that post!!  Sorry I haven't replied to your last e-mail... is next week okay?? :)

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#6) On May 29, 2008 at 8:27 PM, binv271828 (< 20) wrote:

Thanks! I really appreciate that! Yeah, I love thinking and writing about that stuff. It makes me very optimistic to see how the future is going to turn out :)

And no worries on the email. With the posts and fool articles you are writing, I know you are a very busy guy :)

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#7) On May 29, 2008 at 9:00 PM, anchak (99.89) wrote:

This is a great effort and needs to be commended. I think we need both the commodities and the alternative energy blogs. Especially the latter to understand and separate the chaff.

On commodities - my own thing is fear. I think the market is extremely manipulated. I just read an article which says Indian Gold consumption is down 7% this year - but of course Golds got nothing to do with that right - the biggest demand and consumption market of the metal, has absolutely no bearing on the price.

I see and understand the macro factors vis-a-vis the dollar - but I think the commodity play is overcrowded - due to the supply of money. The plug will be pulled sometime.

I want to get in (again) and am waiting. Otherwise, right now you need to go in with Long time Horizon money - and be prepared to digest the volatility.

The straight Dollar hedge is a simple safer play now IMHO.




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#8) On May 29, 2008 at 9:27 PM, XMFSinchiruna (26.57) wrote:

Thanks for the comments anchak.  I will make alternative energy topic #2, so get busy people.  :)

I think binv has given an excellent start to the debate with his first 2 CAPS blog posts, so check those out for a starting point, and either continue the conversation there, or start your own.  I will aim for a write-up sometime next week.

I agree there will be enormous volatility in the subsequent chapters of the gold bull, but crowded or not, up she goes.  A.) cost of production is rising fast and will create a solid ground floor through which the price cannot pass.  B.) I agree that the 'straight' dollar hedge is the safest bet... you're referring to gold whether you know it or not.  :)  Price manipulation by investment banks shorting on the COMEX and TOCOM aside, there is no more direct hedge available to the USD.  Also you state the play is crowded due to the supply of money, yet it's that very supply of money that's driving prices higher.  Unless you think inflation is contained and the dollar has stabilized for good, then you can expect gold to continue its rise.

The point is, people, you get bubbles when investors in crowded trades run for the exits because they see a better alternative.  People are clamoring for gold precisely because of the risks present in the other asset classes:  stocks, bonds, and fiat currencies.  Furthermore, we haven't seen anything yet with respect to the gold trade getting crowded... think of all the central banks around the world sitting billions of USD as their reserves... think how nervous they must be for the fate of the dollar... and think of the cascading effect that would occur if just one of those central banks announced a wholesale move out of the USD.  You think Bear Stearns Day was a market-shaker?  Wait for that one.  :)

I would like to see the article on demand from India if you can find it.  I have a feeling the decline is attributable to a decline in jewellry sales, which makes perfect sense as the price climbs out of reach for many.

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#9) On May 29, 2008 at 10:15 PM, Tastylunch (28.67) wrote:

Nice article Sinchiruna, looks like you've taken to the fool pretty fast. 

You know my own take FWIW on commodities is that the megacycle still has legs left. How much longer I don't know, but the demand story is real and still present. I could see a sharp correction happening at some point due to technical exhaustion. It does seem like the easy money may be gone now, but there are plenty of good plays left in the years ahead.

However  imo a lot going forward will depend on the election this year. The consumer is wicked mad about gas and they blame wall street. I've heard of grassroots movements on talk radio (liberal and conservative) about restricting commodity trading  (reducing maximum leverage etc). There is an unusual sophistication to these complaints I've been hearing in the media and from my customers. In the past the average joe didn't even sound like he knew the commodities market even existed, I don't think that's true as much anymore.I think there is considerable legislative risk for commodities traders if a dem wins the white house.

whether you view tighter regulation as a good or bad thing is up to you. 

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#10) On May 29, 2008 at 11:40 PM, goldminingXpert (28.80) wrote:

Regarding change in my opinion, yes you were largely responsible for bringing me around, particularly in ending my Goldcorp pick as I was inclined to leave that one open. (I still have red thumbs on Kinross and Yamana due to the 7-day rule, but I will be closing those picks tomorrow.)

I'm fine with the teasing-- though I would note Silver is down over a dollar an ounce in the past 2 days. I once again advanced solidly in CAPS rank today despite only having a small increase in my score... the fall in gold-related stuff caused other people to fall below me in CAPS rank. Hopefully I can ride the wave back up with all you gold faithful once the market turns.

Is uranium included in alternative energy? I can write something up about how much I love the uranium stocks--unlike solar and wind, uranium brings cheap scalable always-ready energy without additional R&D demands. USU is one of the few stocks that I have more than a +5 score on that I haven't closed/re-picked for accuracy banking on CAPS. 

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#11) On May 30, 2008 at 8:13 AM, ATWDLimited (< 20) wrote:

Thanks for the praise and honorable mention. Glad to see the Caps Blog search is useful. Today we have a short term correction, and I am selling of aoff almost all my stocks, CAPS and real life, until the amrket stabilizes, especially since oil is retreating and commodity stocks are down in Europe and Asia.

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#12) On May 30, 2008 at 9:51 AM, XMFSinchiruna (26.57) wrote:

ATWD... you surprise me.  Reducing oil holdings in favor of natural gas and coal I could perhaps bless, but exiting the market at this stage???  If the commodity bulls in CAPS are any indication of the larger street, then it looks as though loads of people will miss out on the next big surge.  I've tried my best to reassure everyone gold and silver, in particular, are not in danger of being a 'bubble'.  I was hoping we could all benefit together and celebrate when we have $1,200 gold this year or early next...

And for everyone worried about a crowded trade... if CAPS is any indication, it's gotten a whole lot less crowded in recent days.

Good luck to all!

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#13) On May 30, 2008 at 4:22 PM, ATWDLimited (< 20) wrote:

About the earlier comment, In caps I made an error, though t the dollar was looking stronger, and commodities would tumble today, but they id not, and hence my reduced stakes. I am now diversifying more with alt energy, and more steel, coal etc. Will reload on oil though. My mistake on Caps today, I think it cost me. In real life, I only sold some stocks that I felt were over traded, and did not sell much more than 5%-10% of holdings.

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#14) On June 27, 2008 at 8:43 PM, ATWDLimited (< 20) wrote:

Hey, coal shot through the roof, and is up over 25% as a sector. See, I know what I am doing. Now it is back to more silver/gold.

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