The Daily Reckoning
Weekend Edition
December 11-12, 2004
Baltimore, Maryland
By Tom Dyson MARKET REVIEW: HOT COMMODITIES It's no secret that Jim Rogers is bullish on
commodities...he's been touting them to anyone who'll
listen, since 1998. And there are many people who listen to
Jim Rogers. Not only is he interesting, knowledgeable,
experienced and confident, he's also extremely rich. When
it comes to investing, the man's a money machine. So it's no surprise that Jim attracts a great deal of
attention from aspiring speculators and investors. His
first two books flew off the shelves like hotcakes. He
turns up in Barron's, the Journal and even the Guinness
book of records! And if you're planning to watch him give a
speech at one of the many conferences he's invited to,
you'd better be early...otherwise you'll be standing up at
the back! But here's the thing. Everybody listens to him, everybody
agrees with him, but still nobody follows his advice. It's
definitely an improvement from the old days, he points out,
"[In 1998] I was appearing weekly on a program on CNBC, and
I started talking about investing in commodities and how
the fast-growing Chinese economy would drive the demand for
raw materials - and everyone looked at me as if I was
crazy." On January 1, 1999, Jim set off around the world on a
three-year road trip. And because it can be tricky finding
CNBC in war-torn Mozambique and there aren't too many
stockbrokers out in the Siberian Tundra, Jim stashed a
large chunk of his fortune in a commodities index. It's
called the Rogers International Commodities Index, and
Rogers designed it himself. As we've come to expect, it was a shrewd move. "When Paige
and I returned from our trip - to a post-September 11
America - the fund was up 80%. While we were away, the dot-
com bubble went bang. People remarked how 'lucky' I was to
have avoided all the pain. I tried to be kind. I was now
old enough to know that anytime you move away from the
herd, the herd will criticize you, indeed revile you; it
will call you 'crazy.' But that's a good thing for an
investor: Nearly every time I strayed from the herd, I made
a lot of money." Dollar bulls might agree, last week anyway. The dollar
snapped back with gusto, sending gold and silver tumbling.
In recent weeks, the short side of the dollar has become a
very crowded trade. Gold fell nearly $22 last week, while
it's shiny cousin, silver, fell a whopping $1.31, or
16.35%. "We find it almost comical," says the Gartman
Letter, "that The Economist had as its front page last week
the photo of a U.S. dollar being eaten by an insect, along
with the headline 'The Disappearing Dollar.' Such headlines
mark turning points far more often than not...although we
would have preferred having this sort of headline appear in
Newsweek or Time or some other more popular magazine, for
then we would be absolutely certain that a long term,
material U.S. dollar low had been marked." The euro fell
almost 2 cents against the dollar, sliding down to 1.3224
on Friday. Sterling now trades for $1.9136, and the yen's
at 104.82. The stock market suffered mild losses, pushing the Dow down
49 points on the week, to close at 10,543. Bonds, on the
other hand, were very strong...10-year yields fell by 11
basis points, while 30-year yields declined 12. Oil came
off too, spiking a dollar lower on Friday to close the week
at $40.71 a barrel. Despite the muted response to his advice, Jim persists in
spreading the word about commodities. To that end, he's
just completed his third book, titled "Hot Commodities."
And just in case you hadn't figured it out already, the
book is entirely about commodities! Like his previous
books, 'Hot Commodities' is entertaining, easy to read and
very informative. Rogers covers the fundamental case for
commodities, explains how supply and demand interact with
price cycles, and explores the peculiarities of each
product. But unlike the adventure stories he's better known
for telling, this book actually explains how to invest in
commodities - from tick size calculations to choosing a
broker. It's a very persuasive piece of work. "I'm convinced that the value and strength in the
commodities market will continue for years to come - that
we are, in fact, in the midst of a long-term secular bull
market in commodities," states Rogers. 'Hot Commodities'
should be in bookshops early next year. Rogers is convinced, we're convinced, you're convinced. Now
it's time to do something about it... Regards, Tom Dyson,
The Daily Reckoning P.S. You didn't think we'd leave you in the lurch, did you,
dear reader? Of course not. Outstanding Investments is a
newsletter devoted entirely to commodities. And as you'd
expect, returns have been very good over the last few
years. The current recommedation is taken from the energy sector.
Did you know there may be enough oil to last for the next
400 years - on this continent? Well, this month's edition
features a company poised to cash in on this massive new
discovery. We've just received the report... Athabasca Oil Sands
http://www.agora-inc.com/reports/OST/oilC13 P.P.S. There is a second alternative. If you really want to
turbo-charge your commodity profits, you might think about
Kevin Kerr. He's got the hottest hand in the business, and
is making some serious money - on a daily basis. Yesterday,
we received this email from a reader: "I'm a new subscriber and couldn't be happier so far... "I subscribed a couple of days after your recommendation of
the coffee calls. I bought 20 of the May '05 coffee call
contracts on Nov. 12 for 3.20 (a total investment with
roundtrip commissions of $25,500). Per your recommendation,
I sold 9 of the coffee contracts on Nov. 18 at 6.70 for
A gain of 109% ($11,812) in 6 days. I continue to hold the
remaining 11 contracts and have enjoyed further
appreciation on those contracts." -- C. Simmons Yesterday, Kevin recommended that his readers sell the
second half of the coffee position - for a 270% gain! Learn more about Kevin's trading technique... Resource Trading Alert
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THIS WEEK in THE DAILY RECKONING
A GOLDBUG'S LIFE 12/10/04
by Bill Bonner
"But the story of paper money is short and always sad.
Since the invention of the printing press, a new paper
dollar or franc can be brought out at negligible cost. Nor
does it cost much to increase the money supply by a factor
of 10 or 100 - simply add zeros. It may seem obvious, but
adding zeros does not add value." Tom - went...
http://www.dailyreckoning.com/body_index3.cfm?id=11007
A NEW ILLUSION: THE FALLING DOLLAR 12/9/04
by Dr. Kurt Richebächer
"There rules a perception in the markets that the U.S.
economy is fundamentally strong and, in addition, vastly
superior to that of Europe in resilience and flexibility.
All that is sheer nonsense. Due to years of unimaginable
credit excesses and resulting monumental imbalances, the
U.S. economy is highly vulnerable to a sudden downturn."
http://www.dailyreckoning.com/body_index3.cfm?id=10995
LUCK BE A TRADER... 12/8/04
by Nassim Nicholas Taleb
"A few years ago, when I told a then Master-of-the-Universe
type, that track records were less relevant than he
thought, he found the remark so offensive that he violently
flung his cigarette lighter in my direction. The episode
taught me a lot. Remember that nobody accepts randomness in
his own success, only his failure."
http://www.dailyreckoning.com/body_index3.cfm?id=10982
TAR BABIES 12/7/04
By Eric J. Fry
"In an era of $50 oil, and increasingly unreliable supply
chains, the oil sands of Alberta assume a far more
prominent position - strategically and geologically - among
the world's largest deposits. For one thing, $50 oil
renders the relatively high-cost production of syncrude
immensely profitable." http://www.dailyreckoning.com/body_index3.cfm?id=10969
THE PUNGENT SMELL OF FEAR 12/6/04
by The Mogambo Guru
"There has NEVER been an 'effective central bank' in this,
or any other, 'fiat money period,' you blockhead! And I am
here to tell you that if you think that the simmering,
constant inflation since 1913 has been a replication of the
stability of a gold standard, or even a reasonable
facsimile, or a rough approximation, or even a vague
resemblance, then you are lying right though your stupid
teeth!"
http://www.dailyreckoning.com/body_index3.cfm?id=10955
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HEADLINE, NEWS And INSIGHT: Making Money in Early America
by Byron King
"Aside from a few limited experiments in paper currency,
real money - the gold or silver kind that was accepted in
exchange by almost all people in almost all places at
almost all times - was not native to the colonies at all.
People had to improvise."
http://www.dailyreckoning.com/body_headline.cfm?id=4336
China's Foot on America's Throat
by Todd Stein
"But the fact that he openly recognized the need to move
out of U.S. dollars tells us that a massive dollar decline
is not a matter of 'if,' but 'when.' The largest
beneficiary of this will be the precious metals - gold and
silver - make no mistake about it."
http://www.dailyreckoning.com/body_headline.cfm?id=4328 Computerized Confidants
by Jonathan Kolber "Computer power continues to double roughly every one and a
half years. Today's supercomputers rival a rat's brain in
their sophistication. Within the next two decades, by every
reasonable projection, computers will match human brains
and then rapidly outstrip us." http://www.dailyreckoning.com/body_headline.cfm?id=4324 ---------------------- Advertisement
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