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Commodities Commodity Prices
by 
  • Seedlings Destroyed by Rogue Frost
  • Relying on real stuff
  • Have I done my job?

It’s time
to start over. Every year after St.
Patrick’s Day I plant some snap peas, beans and a few other easy-to-manage
vegetables from seed. But this year,
we’ve had more than a couple rogue snow storms, frosts and other non-seedling
friendly weather events in the past month alone. So, I’m starting over. It’s not a big deal. Seeds are relatively cheap, and I have
plenty.

But it does mean I’ll have
to wait a bit longer to enjoy fresh vegetables. In the meantime, I still have a huge stockpile of frozen and canned
vegetables as well as a store of dry food goods like rice, beans and
pasta.

If you have any tips on
window-box vegetable gardening PLEASE send me a note at [email protected].

I hope you can see the
analogy for the markets. You might call the
May 7th flash crash a “rogue frost” for the seedling-like bullish
trend in the broad market. And like every
investor should be, I am diversified in a variety of stocks that would stand to
benefit from continued strength in the broad market.

I’m a commodity investor
first and foremost – but I’m no oracle. My wife and I have investments in plain-Jane mutual funds that have been
pretty mediocre. And if the broad market
claws its way back into a sustained, legitimate bullish trend, we don’t want to
miss out.

Those seedlings might bear
fruit. But in the event that they don’t,
we still have our reliable dry goods and preserves: hard commodities like gold
and silver, as well as appropriate commodity securities in energy, precious
metals and agriculture. If you’ve been
buying these stocks and you own some physical gold and silver, then you’re
already prepared for rogue frosts and sustained freezes alike.

That’s
because we can rely on this “real stuff” in the event that the markets continue
their bearish trend. And today, it’s
tough to be optimistic about the broad market.

The Dow Jones Industrial
Average index is already below its May 7th sustained lows, and is on
pace to test its May 6th “Flash Crash” lows of sub-10,000.


Many traders and analysts
view these recent lows as important psychological floors for the broad
market. Their reasoning being that if
the market can’t hold these lows,
there is nothing preventing the market from dropping even further – like
testing October, 2009 lows of 9,500, or July lows of just over 8,000.

If no one can be sure where
the next bottom is, then everyone holding stocks will look for an exit, any
exit to try to lock in some gains or to at least avoid losing big.

We know that when people
exit the stock market, they look for safe haven in US Treasury Bonds, as well
as precious metals like gold and silver. Any upside for gold and silver typically precedes big upside in precious
metal stocks. I know I’m in broken
record territory, but there’s just no other way to dice it at this point.

If you’re
not at least somewhat hedged by owning commodities and commodity stocks, then I
haven’t done a good job as an editor of this letter.

But it’s not too late to
protect yourself from market and currency calamity. If you don’t own physical gold and silver, go
over to kitco.com or blanchardsonline.com and take a look
at their offerings. They both have fairly
priced gold and silver products for someone with as little as a few hundred
dollars or as much as a few hundred thousand dollars. I have no financial incentive to recommend
either vendor, but I’ve had very positive buying experiences with both.

As far as precious metal
stocks, I recently had Chief Investment Strategist Ian Wyatt put together a
comprehensive report on the best small cap gold company in the stock market
today. You can read all about this
company by clicking
here now. Gold is currently selling
for around $1,193 an ounce, but if you buy shares of this company today, it’s
like buying gold for $120 an ounce. That’s because they have verified reserves of 1.5 million ounces, or
about $1 billion worth. But the
company’s market cap is just $170 million. So becoming a shareholder today gives you the potential to enjoy capital
gains of 100%-1000% as this company brings their gold to market.

Check out the full story here.

Good investing,

Kevin McElroy

Editor

Resource Prospector

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