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Monday, April 28, 2014
I couldn't believe it...
If I didn't hear it myself, I wouldn't have believed it.
Here's what happened...
Last week, at a private investor conference in the Bahamas, two legends in commodity investing said they were "not that bullish right now" on commodities.
I'm talking about Doug Casey and Rick Rule. These guys have made their fortunes from investing in commodity-related investments.
What does that mean when two living legends in commodities don't love commodities?
You can look at it in two ways:
1) Jeez, these guys know commodities, so the sector must be about to fall.
2) When even the living legends are no longer bullish, then the bottom is in – every one that wants to sell has sold.
So... which is it?
When you think about it, we've been through a crazy few years... The prices of stocks and bonds have soared, thanks to the Fed's long-term commitment to near-zero-percent interest rates.
But surprisingly, investors have completely left commodities behind – so far. But that may be changing – right now.
Our True Wealth Systems computers tell us that it's time to buy commodities today.
In fact, for the first time in as long as I can remember, all of our True Wealth Systems physical-commodity indicators were in "buy" mode last month.
With our computers flashing "buy" signals, and two resource legends "not that bullish," I believe commodities could move much higher starting now. The problem is finding the right way to buy them. (It is harder than you think.)
However, we've found an excellent way to make the trade. It's called the SummerHaven Dynamic Commodity Index (SDCI). This index strives to take advantage of situations in commodities that tend to happen over and over to produce superior returns.
In short, instead of buying and holding all commodities like a typical fund, the SDCI only holds the commodities that history says should perform the best over the next month.
SDCI's exact criteria are a bit complex. And the gory details aren't all that important today. What's important is that it works. Over the last 20 years, this index crushed the returns of the benchmark commodities index (CRB). Take a look...
While the CRB increased just 155% in value, the SDCI returned nearly 10 times that gain... up a staggering 1,426%. And based on annual gains, the SDCI tripled the return on general commodities... up 14.5% a year versus 4.8% a year for the CRB.
With history as our guide, the index we're buying into today does exactly what we want to see... it produces outsized gains the smart way... with less volatility.
Now you can't invest directly in the SummerHaven Dynamic Commodity Index... But luckily there's a simple ETF you can buy. It's called the U.S. Commodity Index Fund (USCI).
The historical record for this fund is clear. Over the long term, shares of USCI will beat commodity prices in general. Its benchmark tripled the annual return on commodities over the last 20 years!
Conditions are in place for commodities to do well... The U.S. economy is growing, and world governments are printing money. With big gains in stocks and real estate, investors have given up on commodities. Heck, even two commodities legends aren't interested.
Meanwhile, our TWS computers continue to flash "buy." I'm taking their side. And shares of USCI are the absolute best way to make the trade.
Steve recently gave his True Wealth readers another great way to put money to work... "European stocks are irresistible right now," he writes. "They're paying 3.3% dividend yields today – more than most European government bonds... It won't last." You can find out Steve's favorite way to trade them right here.
One of Steve's all-time favorite "alternative" investments is an asset the average investor has never considered... but that has consistently beaten stocks and bonds over the past 30 years. In this classic interview, Steve explains how you can earn big, safe income from this asset... while diversifying outside of the U.S. dollar.
NEW HIGHS OF NOTE LAST WEEK
Johnson & Johnson (JNJ)... Big Pharma
AstraZeneca (AZN)... Big Pharma
Eli Lilly (LLY)... Big Pharma
Merck (MRK)... Big Pharma
Novartis (NVS)... Big Pharma
Altria Group (MO)... cigarettes
Royal Dutch Shell (RDS/A)... Big Oil
Hess (HES)... Big Oil
Continental Resources (CLR)... oil and gas production
Chesapeake Energy (CHK)... oil and gas production
Range Resources (RRC)... oil and gas production
Halliburton (HAL)... oil and gas services
Schlumberger (SLB)... oil and gas services
C&J Energy Services (CJES)... oil and gas services
Baker Hughes (BHI)... oil and gas services
Valero (VLO)... oil refineries
Berkshire Hathaway (BRK)... Warren Buffett's holding company
Union Pacific (UNP)... railroad
Delta Air Lines (DAL)... airline
Alcoa (AA)... aluminum miner
Archer Daniels Midland (ADM)... agriculture
Joy Global (JOY)... heavy equipment
Caterpillar (CAT)... heavy equipment
Harley-Davidson (HOG)... motorcycles
Raytheon (RTN)... "offense" contractors
M&T Bank (MTB)... bank
NEW LOWS OF NOTE LAST WEEK
Not many... it's a bull market!