commodity futures

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Jim Rogers: "Don't Give Up on Commodities"

By , Associate Editor, Money Morning • @TaraKateClarke -

Jim Rogers

Legendary investor Jim Rogers just spoke with BBC's Radio 4 on Aug. 24, now known as "Black Monday" - the day commodities crashed to their lowest level in the 21st century.

Brent crude oil prices, the international benchmark, have plummeted 18.8% in August so far, dipping below $44 a barrel. Futures have fallen 38.6% from the 2015 high of $69.94 seen just over three months ago. WTI crude oil prices have fallen even more - the U.S. benchmark has tumbled 20% this month, 34.6% this year, to hit below $39 a barrel.

There are ample reasons to be pessimistic about commodities right now.

But according to the famously contrarian Rogers, investors shouldn't rule out a comeback for the depressed sector...

You Don't Want to Miss This Opportunity

By , Money Morning -

I recently spoke at FreedomFest in Vegas along with the world's best and brightest minds, such as Steve Forbes, Senator Rand Paul, and Whole Foods CEO John Mackey.

I discussed the growing global demand for resources and gold to a crowd of 2,000.

Half of the group was attending for the first time, which demonstrates to me a growing curiosity to learn about macro trends shaping the world and affecting our investments.

Among investors these days, coming across a fellow commodity bull is about as rare as finding a positive story in the media, especially when you look at the results of metals and natural resources during the first half of 2012.

Only four commodities on our periodic table pulled off a positive return.

Wheat grew the most, rising 13 percent, followed by single-digit rises from corn, gold and copper. On the negative side, coal lost more than 19 percent, followed by crude oil (-14.1 percent), nickel (-13.6 percent) and lead (-12.3 percent).

A Clear Tipping Point for Resources

Fears of slowing global growth and how it will affect commodities have caused many investors to dig their heels in the ground and resist owning natural resources. Perpetuating this negative investor sentiment is the constant 24/7 news cycle punctuated with pessimism.

During a natural resources conference, Jeremy Grantham of GMO pounded the table for an investment in resources, but you wouldn't know it by reading the headline of the CNN piece that covered the topic.

In its article called, "Our planet will truly be toast," CNN discussed Grantham's comments on a global commodities shortage, saying he was "bearish on human resources...but bullish on natural resources investments."

His argument focused on the swelling population in China, and the fact that the world had experienced a "great paradigm shift" around 2000, when commodity prices, which were negative for decades, "abruptly reversed course." He told the crowd, "in the long run, you can't afford to miss this opportunity." We agree.

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Commodity Stocks: High Yields and a Hedge Against Inflation

By , Money Morning -

For years now I've been pounding the table on two big themes...

The first is that income investing is a great way to boost not only your returns but your cash flow. And second, that every investor should have a substantial chunk of their portfolio invested in commodity stocks.

Here's the good news: it is perfectly possible to combine the two strategies, earning the benefits of both worlds.

In fact, in a moment I'll tell you about a few of my favorite high-yielding commodity stocks. Two of them pay safe, hefty yields over 7%!

Compare that to what you can earn with your local bank or with U.S. Treasuries. You'll quickly find there is nothing comparable.

In fact, by investing in income-producing commodity stocks, you get a steady stream of income along with the best possible protection against the ravages of inflation.

That combination is tough to beat. Let me explain...

The Best of Both Worlds: Income and Appreciation

The truth is, income investing is crucial for three reasons.

The first is obvious. No matter how well-off you become, the bills just keep getting worse and worse. I never met anyone that couldn't use more cash.

The next two aren't nearly as evident to most investors-- even though both are of the utmost importance to their portfolios.

Stocks that pay steady, consistent dividends add a measure of certainty to share prices. It's why top quality dividend stocks typically do well even in bear markets. Conversely, since earnings are so easily manipulated, companies with fancy bottom lines but no dividend usually turn out to be a scam and end up being priced accordingly when things turn south.

Finally, dividends themselves keep management honest (or fairly honest.) Cash that is paid out to shareholders cannot be used for grandiose expansion plans, or to pump up the stock price to help inflate top management's stock options.

As a result, companies that pay decent dividends are less likely to suffer value-destroying scams than those that don't and are likely to be around longer. For investors, that offers stability -- invaluable these days.

As for commodity stocks, I'll be the first to admit they are not a universal panacea. But two long-term factors currently favor them.

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