5 Best Commodity Picks for This Year

By: Halston

I predict that over the next few years, the commodities markets will be a cash cow for traders who are prepared. You do not want to get left out of this upcoming investment opportunity. We are, depending on who you ask, entering the next leg of the continuation of the major move in the commodity markets in the past thirty years. Pretty much every market has made gains, consolidated, and is now primed for more upside movement. If history is any indicator, prices of most commodiities will probably take off to historical highs over the next 2-3 years. To give you an idea of what I think is in store, take a look at my top five picks for 2007:

1 - Gold
Keep buying it. In my estimation, the effective "floor" in the gold market, at least for the foreseeable future, is now around $550. After an initial bump to over the $600 an ounce mark, the gold market experienced a correction/consolidation phase, moving back about half the distance between $625 and $525. It is, as of this article, back up around the $630 level. Look for gold to take out its previous all-time high, and move well beyond $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 floored myself to see gold fall back under $500 anytime soon--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
To date, cotton has been the runt of the litter in the futures bull market. When it does catch up to the rest of the market, be sure that it will take hold right away. Cotton prices are now stuck around $0.50, even with China and India driving exports and because the cotton belt hasn't regained full momentum after Hurricane Katrina's wake. Given that, I predict that cotton prices will double in the next 24 months.

3 - Wheat
Of all the grain futures, wheat has proved its strength since the opening of this bull market. Even when USDA reports doomed soybean and corn prices, wheat continued to push ahead. For wheat, I have a long-term price target of $8-$10.

4 - Cocoa
Cocoa has been a bit like the gold market--that is, it spent a number of years going hardly anywhere at all, and certainly not higher. Then, at the start of the current bull market, it shot all the way up to the mid-20s in price. Since then, it has moved back 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 all other commodities, to zoom back up and make new all-time highs during this second leg of the bull market. If you lost out on the run-up the first time, don't get caught standing on the sidelines again. Buy cocoa.

5 - The CRB Index
Want to find the easy way out? 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 struck rick in the 1980s and 1990s simply by investing in the Dow Jones or S&P Index (as opposed to trying to find individual stocks), you can take gains from the total market momentum in commodity futures simply by buying the CRB Index, and avoid the hassle of investigating which specific market is the best investment return at any given moment along the way. All markets will, of course, have their ups and downs, but overall market momentum should keep trending up. It's a bull market, plain and simple.

The opportunity to make money in the commodity markets over the next 5 years is without a doubt the greatest investment opportunity that I have ever come across. I can't imagine another one like it within the next 50 years. Do not miss out on this chance to create a fortune that could take all your financial worries away, in the investment horizon of just a few years.

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Halston Adams is a retired futures broker who stumbled onto his recipe for producing impressive returns from successful traders he befriended. Learn more about his trading approach at: futures trading today.

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