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April 21, 2016

 End of 2016 Headline:

The Fed Wanted Inflation…And they got it…

but a LOT MORE than anybody expected

AND TREASURY BONDS WILL HAVE TANKED…

This intent of this newsletter is mostly to show you some charts of what is happening in a broad spectrum of markets…all of which I believe support my contention that commodity inflation is coming…with something of  a vengeance…And the resulting surprisingly strong uptick on prices THROUGHOUT 2016 will be a major boon to Stocks and the Economy…and a knockout punch for the Treasury Bond market.

Virtually every Central Bank on the planet has been taking turns pumping money like crazy for years now…And of late, they are ALL are telling you, “We WANT inflation!”…and I think they are finally going to get it…BIGTIME.

World Demand for just about every major commodity we trade will set new records this year…Oil being one of them…and when you combine that RECORD DEMAND with international production cutbacks due to low prices, I don’t think the outcome can be anything but SHARPLY HIGHER PRICES across the board…With this simple equation in mind, I have been loudly recommending owning a number of commodities for a while now…And from what I have lately seen, they are virtually ALL now in gear towards the upside.

Decide for yourself…

4-21-16june16gold.png

4-21-16july16silver.png

4-21-16july16soybeans.png

4-21-16july16soymeal.png

4-21-16july2016corn.png

4-21-16july2016cotton.png

4-21-16july16lumber.png

4-21-16june16crude.png

Do you think all these rallies are just random? I sure don’t…I continue to maintain that all the talk about China slowing (and dragging everybody down), or the problems in Europe, or that the USA economy is “not growing fast enough…or not creating enough good jobs”, or any of the other economic media’s negative BS is just a load of you know what…I firmly believe the world is in the beginning stages of a global economic boom…and with WORLD DEMAND SETTING NEW RECORDS FOR ANY NUMBER OF MAJOR COMMODITIES, I SEE NOWHERE FOR PRICES TO GO BUT UP…AND POTENTIALLY UP A LOT…AND IF THIS IS THE CASE, WE WILL BE SEEING SOME STOUT INFLATION NUMBERS...AND BOND PRICES THEREFORE HAVE NOWHERE TO GO BUT DOWN.

I CONTINUE TO BELIEVE TREASURY BONDS ARE GOING SERIOUSLY IN THE TANK FOR THE REST OF 2016.

So…before getting to some charts and ideas on the bond market, I want to address the one commodity market I left out of the list above as I absolutely think the stage is still set for an incredible upside price explosion there…and that is Wheat.

One more time…Here is a look at Commitments of Traders in Wheat…where, as of last Friday, Large Speculative Funds STILL had the largest net short position EVER in this market…AND, per my analysis of where prices were as they built this position over the past 6 months or so, my conclusion is that this RECORD SHORT POSITION must already be in a loss…

See for yourself on the chart following…

Observe the time frame (inside blue circles) in which they have accumulated this position...Then look back at where prices were and  estimate what their best case average price might be for the 167,000 contracts they were short as of last Friday...And from what I see, I can only surmise that their average entry price must be somewhere under $5.00, and most likely more like $4.75-$4.85…If, so with May Wheat now trading about $5.00, I can only assume this massive position is already losing money…and with Wheat having jumped about 40 cents the past 4 days, those fund managers are just about as scared as you can ever get in this business…Check it out…

4-20-16wheatcommitments.png

Here’s the monthly going back 25 years…Note the record commercial longs in red (undelivered wheat for export for which they have orders…but don’t yet have the wheat) and record spec shorts in green….Also to note that a rally to $6.50 or $7.00 looks like nothing big at all…

4-21-16wheatcommitmentsmonthly.png

Another look at why those guys MUST be sitting on a monster losing trade…

4-21-16july16wheat.png

Here is a fantastic 1 & 1…

4-21-16july16wheatopts.png

Another look at the long term…

4-21-16wheatmonthly.png

And finally…Here are the Bonds…who HATE INFLATION…I say growth is surging…and inflation is already cranking up…AND BONDS HAVE NOWHERE TO GO BUT DOWN. PERIOD. AND IN A VERY BIG WAY.

4-21-16bondmonthly.png

And here’s the trade at today’s prices…

4-21-16sept16bonds.png

Markets are MOVING guys…I think Wheat and Bonds are about absolutely erupt…IN OPPOSITE DIRECTIONS…So pick up the phone and find out more about what is going on here…

Just do it.

Thanks,

Bill

866-578-1001

770-425-7241

The author of this piece currently trades for his own account and has financial interest in the following derivative products recommended within: Treasury Bonds and Wheat.

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