The 5 Best Commodity Trades for 2007

The 5 Best Commodity Trades for 2007

The money to be made over the next 5-7 years in basic commodities is incalculable. You do not want to miss out on this truly once-in-a-lifetime investment opportunity.
We are now entering the second phase of the first major bull market in commodities in the past 30 years. Pretty much everything has had a run up, settled back down a bit, and is now picking up momentum back to the upside.
If past bull market history is any indicator, prices in many basic commodity markets will soar to new all-time highs over the next 24-36 months. Here are my picks for the best trades for 2007:

1 - Gold
Keep buying it. In my estimation, the effective "floor" in the gold market, at least for the next several years, is now around $550. After an initial run up over the $600 an ounce level, the gold market went through a correction/consolidation phase, retracing approximately half the distance between $625 and $525.
It is, as of this writing, back up around the $630 level. Expect gold to take out its previous all-time high, and move well above $1,000 an ounce. Between gold and silver, thus far gold has been the market leader, and that's why I would recommend it over silver. I would be astounded to see gold drop back below the $500 level anytime in the foreseeable future - but I would not be surprised in the least to see the price of gold over $2,000 an ounce within the next 18 months.

2 - Cotton
Cotton has been, up to this point, sort of a "weak sister" in the overall bull market in basic commodity prices. Whenever it finally joins the flow of the overall market, expect it to play catch-up very quickly. Currently, cotton is languishing around the 50-cent level, despite steadily increasing export demands from China and India, and despite the fact that cotton production across the South still has not fully recovered from the devastation of Hurricane Katrina. My prediction: Cotton will double in price over the next 24 months.

3 - Wheat
Among the grains, wheat has shown unfailing strength almost since the beginning of the current bull market. Even on days when USDA reports sent soybeans and corn tumbling down, wheat managed to forge ahead. My long-term price target on wheat is $8-$10.

4 - Cocoa
Cocoa has been a bit like the gold market - that is, it spent a number of years going not much of anywhere at all, and certainly not higher. Then, in the initial phase of the current bull market, it ran all the way up to the mid-20s in price. Since then, it has backtracked down the to the $14-$15 level, and has recently shown signs of bottoming out and turning back to the upside. Look for cocoa, like nearly every other market, to zoom back up and make new all-time highs during this second leg of the bull market. If you missed the run up the first time, don't get caught standing on the sidelines again. Buy cocoa.

5 - The CRB Index
Want to do things the easy way? - Then just buy the CRB Index, and ride the wave of the entire market. This is the biggest bull market in commodities in history. Just as you could have made a fortune in the 1980s and 1990s simply by buying the Dow Jones or S&P Index (as opposed to trying to pick individual stocks), you can take advantage of the total market momentum in commodity futures simply by buying the CRB Index, and save yourself the trouble of trying to figure out which specific market is the hottest at any given moment along the way. Individual markets will, of course, have their ups and downs, but overall market momentum should remain strongly tilted to the upside. It's a bull market, plain and simple.
The opportunity to make money in the commodity markets over the next 5 years is the single greatest investment opportunity that I have ever seen. I do not expect to see another one like it within the next 50 years. Do not miss out on this chance to amass a fortune that could make you set for life, in the space of just a few years.

Halston Adams is an ex-futures broker who learned how to generate yearly returns of 100% from successful traders he befriended. Learn more about his trading approach at: http://www.futures-trading-strategy.com


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