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This Commodity Could Rise 31% Over the Next YearBy
Thursday, November 30, 2017
I love a hated investment...
I want to buy when everyone else has given up... when no one else can stomach the idea of buying.
That's where we are in the commodity markets today. Prices have been falling for years. And investors aren't interested.
Today, a certain commodity is in an even better position. It recently hit the most hated level we've ever seen. And it's now beginning an uptrend.
That means we could see gains of up to 31% over the next year, based on history. And best of all, there's a simple way to make the trade.
Here are the details...
Commodity prices are up this year... But not everything has recovered.
Today's opportunity is down 29% over the past year. It recently hit its most hated level ever. But the trend appears to be back. That means big gains should be on the way.
I'm talking about sugar...
Sugar has crashed. The price per pound is down nearly 60% since peaking in 2010.
Not surprisingly, investors are scared. They're more negative than ever, based on the Commitment of Traders (COT) report.
The COT report details the real-money bets of futures traders. It tells us whether traders are excited about or disinterested in an asset.
That means it's a useful contrarian tool... When traders all agree on an outcome, it's a good idea to bet against them.
And futures traders have become extremely bearish on sugar in recent months. Take a look...
 The COT report hit its most negative level ever in August, -77,495. And it has only rebounded slightly to 34,270 since then. This negativity is a good thing for us. It's setting up for a fantastic investment opportunity, based on history.
You want to own sugar when it's this hated. Since 2000, sugar prices have soared when the COT fell below and then rose back above -35,000. The table below has the full returns...
Sugar prices have risen steadily over the past 17 years, with typical annual gains of 5%. But owning sugar when it's this hated has led to dramatically higher returns. Similar extremes led to six-month returns of 17% and one-year returns of 31.4%.
Those are huge gains. They're many multiples of what you could typically expect in this commodity. And these extremes are rare... We've only seen this happen nine times since 2000.
Importantly, sugar prices have rebounded in recent weeks...
The simplest way to own sugar is the iPath Bloomberg Sugar Subindex Total Return ETN (SGG). SGG shares are up double digits in a little more than a month.
This isn't a screaming uptrend. But it's movement in the right direction. And history tells us much larger gains should be on the way.
We could easily see double-digit gains over the next few months. And returns of as much as 31% over the next year are possible.
This is a perfect "hated" investment. And shares of SGG are an easy way to make the trade.
If you've been looking to put money to work in commodities, this is a place to consider right now.
Good investing,
Steve
Further Reading:
Steve also sees big upside in a few other areas of the market. See why he's bullish on the U.S. dollar, Japanese stocks, and which precious metal he says could be a better buy than gold.
Yesterday, Steve made a bold prediction that nearly $2 trillion will flow into Chinese stocks over the next two years. "This is a big deal," he writes. "It could end speculation on housing prices in China as we know it. And it could usher in a new era of investing." Get the rest of the story here.
Market NotesTHE RETAIL BLOODBATH HAMMERS THIS DEPARTMENT STORE Today's chart reveals more bad news for "offline" retail...
As regular readers know, the brick-and-mortar retail sector, saddled with debt, has been struggling as more consumers turn to online shopping. Traditional retailers are regularly reporting sinking sales as their foot traffic declines. Today, we're seeing this in a longstanding department-store giant...
At one point, Sears (SHLD) was the largest retailer in the U.S. But the company has been forced to scale back in recent years, selling off its Lands' End line and its stake in Sears Canada. This year alone, it shut down more than 350 Sears and Kmart locations... And earlier this month, its pre-announced third-quarter results brought more bad news. Same-store sales slid 15% from a year prior... And Sears said it would close 63 more locations in January.
As you can see in the chart below, Sears shares are skidding to record lows after the announcement. They're down nearly 70% in the past year. And with pressure from today's retail climate increasing, don't expect the pain to let up anytime soon...
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