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Posts Tagged ‘ Great Depression ’

Dec 27
Tuesday

Commodities Double Dip Depression 1933 and 1938

Filed under Agriculture, Amazon, Commodities

We continue to accumulate Australian listed companies trading below cash/liquid assets - balanced by our shorts in Amazon and Chipotle. In an indirect (admittedly alot RISKIER) way, this is what Jim Rogers is doing: Long Commodities, Short US Tech. We are buying resource companies trading at significant discount to cash, and recently even picked up a holding micro cap company trading significantly below its holdings in listed producing gold companies with single digit PEs. Again, compounding discounts. As volume is negligible, we have not stocked up yet. We will add it to our portfolio once we have our first tranche of purchase. We WILL NOT be going all in, as we expect precious metals to drop - this will no doubt create further pressure on the company share price. We are hoping for an in-specie distribution, which we think is likely as the CEO is also topping up on his holdings. We have bought our initial parcel of shares at a 25% discount to his lowest purchase in his own company - and we hope to continue to out purchase him at lower levels.

Whilst we are bullish on precious metals long term, we are concern and have made provisions for a 30% pull back in gold and silver after a consecutive 10-11 year rally. Silver prices sub $20 (not a prediction) will be our buy signal. We did long silver post GFC at $14 and got off the bus way too early after a “vertical” ascent to $18-19 - feeling like a genius, this feeling did not last for long. Looking at charts of commodities in the Great Depression, we see a double dip in prices of commodities. First crash in 1932-33, prices recovered with quantitative easing (yes they did the same thing back then) in 1937 to peak in 1938, followed by another sharp decline. After this second dip, prices shot up to make higher highs.

We have no monopoly over the future, but when the next crises comes (Euro crisis and default, Japan crisis), commodities may double dip again. Year to date, the ASX is down about 15% - no surprise there as China remains one of the weakest markets for the year - whilst US markets are neutral/slightly up for the year.

Double Dip in Commodities in Great Depression
Double Dip in Commodities in Great Depression

Double Dip in Commodities in Great Depression

ROGERS INTERNATIONAL COMMODITY AGRICULTURE ETN (ELEMENTS) - Yahoo Code: RJA

Rogers Agriculture Index ELEMENTS Chart
Rogers Agriculture Index ELEMENTS Chart

Plan:

1. Continue to accumulate soft commodity position - we are buying RJA in small bites. Buy order at $9, $8, $7 and $6 in increasing quantity (pyramidal increments)

2. Continue to buy cash backed resource companies with decent (tight arsed) management and tight capital structure

3. Short overvalued stocks

All entries filed under this archive


9.9.29 vs 9.9.09: Is This The Peak?
no responses - Posted 09.09.09
Our short term indicators suggested a down night tonight, which we seldom act on by itself unless markets move the opposite direction pre-open to give us a generous margin of error. However, everything is pointing to a rally tonight - the USD remains slaughtered, the FTSE hit 5000, the Dax ...continue
Comparison of Bear Markets: 1929 vs 1937 vs 1976 vs 1987 vs 2000 vs Current Bear Market Charts
7 responses - Posted 07.19.09
Whilst we do not believe the past will predict the future, here is a chart showing all previous bear markets in the history of the Dow since 1929. We plotted all recessions and compared it with the current. 1929-1933 (Great Depression) 1937 1976 1987 2000 (dot com bear market) 2007 (current bear market) If we had to ...continue
The Crash Recovery Analysis: 1929 vs 2001 vs 2009
1 response - Posted 06.10.09
A snapshot on the recoveries in previous crashes, comparing The Great Depression in 1929 vs 1987 vs 2001 vs 2009. The daily charts have the 200 day moving average, used by many technical analysts as the key level of support/resistance. Many believe a launch above the 200 day MA would ...continue
1929 Stock Market Crash Analysis
no responses - Posted 01.24.09
The continued weakness which broke through supports and saw lower lows on Friday (unexpectedly) makes us go back to our charts and drawing table to re-analyze the markets. Sentiment is down again, the financial sector is making new lows triggered by further bad debt, losses, and rising unemployment. News headlines ...continue
Commodities - The Big Picture
no responses - Posted 01.11.09
  The Big Picture                         Whilst we are bullish on commodities long term, we believe prices will remain depressed for at least 12 months, if not a few years. Those expecting a a quick rebound will be disappointed. There is a fundamental paradox that the commodity market will have to go through - ...continue
Giralia - Cashed Up Iron Explorer
no responses - Posted 01.11.09
TheInflationist bought some GIR last week at 0.34c (market cap: 60mil) with 73 mil in cash reserves, no debt, and 4 mil equity in listed investments. Since then GIR touched a high of 44c (29% above our entry) and closed at 39.5c (market cap 70 mil). TheInflationist got a "please ...continue


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