http://watch.bnn.ca/commodities/december-2009/commodities-december-29-2009/#clip250322

Caught me off guard, demand in China was about 7.8 million in 2007 but I believe the actual number is higher more like 9 million, this guy says 8, whatever. Growth will be far more than 10% and $50 oil is a joke, if it gets there buy all you can. Watch.

’871 Billion’ Reasons to Buy Gold: Strategists
Published: Thursday, 24 Dec 2009 | 3:34 PM ET

By: CNBC.com

Will the gold boom continue in 2010? Kevin Kerr, president of Kerr Trading International, and James DiGeorgia, author of “The Trader’s Great Gold Rush,” offered CNBC their outlooks.

Kerr sees both fiscal and monetary policies driving gold yet higher:

“The Senate just gave us 871 billion more reasons to buy some gold,” Kerr declared (presumably referring to the $871 billion health care bill passed by the legislature Thursday).

“The excess printing of money, the issuing of Treasurys—this is going to continue into 2010,” he added. “And the unwinding of the dollar—that trend will continue into 2010 and beyond.”

DiGeorgia agreed with Kerr’s diagnosis and added his own further reasons for gold bullishness.

The supply/demand fundamentals are also very important. We’ve heard about ‘peak oil’—well, we’re at ‘peak gold’ now in production,” DiGeorgia said.

“I expect gold to hit $1,500 [per ounce] this coming year. I did predict $1,200 when it was trading at $700-and-change in July.”

Commodities Trading, Fertilizer Stocks: Taking Stock Podcast
Dec. 21 (Bloomberg) — Kevin Kerr of Kerr Trading International talks with Bloomberg’s Pimm Fox about commodities trading. Malcolm E. Polley of Stewart Capital Advisors LLC discusses fertilizer stocks Mosaic Co. and Potash Corp. of Saskatchewan Inc. Michael Williams of Genesis Asset Management talks about reasons to be a market optimist. Walter Isaacson of the Aspen Institute discusses American leadership and creative thinking. Bloomberg’s David Wilson also speaks.

Click on the link below to listen to the entire interview!

http://media.bloomberg.com/bb/avfile/Markets/Analyst_Calls/vZ_bRCuurQ9Y.mp3

Today on Bloomberg Taking Stock: Monday, December 21, 2009

3:00PM (ET) – Commodities Trading (Coffee & Sugar): Kevin Kerr of Kerr Trading International
3:30PM (ET) – Mosiac (MOS) & Fertilizer Stocks: Malcolm Polley of Stewart Capital Advisors
4:00PM (ET) – Market Optimism: Michael Williams of Genesis Asset Management
4:30PM (ET) – Leadership & Creative Thinking: Walter Issacson of the Aspen Institute

Taking Stock on WBBR 1130AM New York, Bloomberg.com, and XM 129/Sirius 130.

Taking Stock podcast, http://www.bloomberg.com/tvradio/podcast/takingstock.html

http://thewallstreetshuffle.com/podcasts/120209-Seg4.mp3

Sugar at record high over poor Brazilian crop

By Chris Flood

Published: December 18 2009 02:00 | Last updated: December 18 2009 02:00

White sugar prices hit a record high on Thursday, capping a rally that has seen prices rise 13.5 per cent in the past seven sessions.

Liffe March white sugar hit $680.7 a tonne, before slipping to $660 a tonne later, down 0.9 per cent on the day but up 107.5 per cent this year.
EDITOR’S CHOICE
Cargill savours sweet taste of success – Oct-21
Regulation sours sugar output – Sep-11
Sugar prices head towards the sky – Jul-28
Exchange rivalry spills into oil trading debate – Jul-28
Lex: El Niño – Jul-02
Commodities fears after El Niño alert – Jul-01

News that Brazil’s sugar production will be 2.1m tonnes less than expected this year has triggered the latest rise. Conab, the national crop supply agency, forecast 2009-10 output at 34.6m tonnes, compared with September’s estimate for 36.7m tonnes.

Heavy rains have reduced the volume of sugar that can be extracted from Brazilian cane with yields falling to a record low. Traders warned there could be further disappointments with Brazilian output as wet weather has continued this month, making it difficult for mills to produce either sugar or ethanol from water-loaded cane.

ICE March raw sugar dipped 1.2 per cent to 25.64 cents a pound on Thursday after trading above the 25 cents a pound mark this week for the first time since 1981. Raw sugar prices have risen 117 per cent this year.

“There’s no reason to think that we have seen the high for sugar prices yet but the market is likely to remain tremendously volatile,” said Nick Hungate, executive director at Rabobank.

“So much buying has been delayed and we expect further interest from India, Pakistan, Mexico, Iran and Indonesia. Buyers don’t like these prices but it looks like they will have to pay up as we don’t anticipate a solution to the market’s supply problems anytime soon.”

Karim Salamon, an analyst at Sucden, said: “Even if sugar prices move to the 30 cents a pound level, it will not bring any new supply to the market and is therefore not a solution. Consuming countries such as India, Ukraine and China will be forced to delay imports and to reduce stocks to minimal levels.”

Mr Salamon said supply problems were unlikely to be alleviated until Brazil’s sugar mills started to process the new crop in March.

Confessions of a Maniac Trader Kevin Kerr, Investment Advisor and Author

In this ever growing world of investment advisors, very few analysts rise to the top. One of those is a trader, writer, analyst and educator whose path I continue to cross. Kevin and I first met many years ago when we both were hired as writer-traders for a large financial newsletter company. While I was focused on currencies Kevin’s specialty was and still is commodities. He’s never wavered. We both eventually departed to pursue our specialties and years later both again worked for another of the world’s largest newsletter companies.

With a burning desire to create his own company Kerr Trading International was born. His work is based on his philosophy “to take the time to help you understand the potential profit opportunities as well as the risks involved in today’s commodity markets.”

Kerr Trading International, is a diversified commodities firm providing education, trading and consulting services worldwide. Known for his worldwide travels in search of resource opportunities Kevin is in incredible demand by the media, appearing on pretty much any business news show you’ve ever heard of.

Black Swan Capital’s Currency Investor is strictly an informational publication and does not provide personalized or individualized investment or trading advice. Commodity futures and forex trading involves substantial risk of loss and may not be suitable for you. The money you allocate to futures or forex trading should be money that you can afford to lose.

You can follow Kevin at his website Kerr Trading International … and be sure to sign up for his free commodities newsletter, Kerr Commodities Watch.

Q. What got you started as a commodities trader and why do like this area so much?

A. Well Jack, I would like to have a more impressive answer like “I always wanted to be a commodities trader since I was three” but the truth is I wanted to be an airplane pilot…All joking aside as a 20 year old guy having just graduated from the University of Southern California and New York University I found my very expensive education had to be paid for, and I needed a job, quick.

A good friend of mine had two brothers on the floor of the NY Cotton Exchange back in 1989 and they offered me a job as their clerk, I had no idea what it meant but I did know that $28k sounded like a lot of money back then. I took it, and the money and while I got more then I bargained for, it was the best decision of my life. My fascination with the commodities was almost instantaneous, the fast paced almost frenetic action, the wide variety of investment vehicles, the available leverage and of course the incredible profits that could be made in such an incredibly short time, lost too … but that’s another story.

Q. I’ve seen pictures of you out in soybean fields. And I know you spend a lot of time doing research. Without giving away any secrets of course, is there a particular type of analysis (steps in a thought process) technical, fundamental, etc. that helps you make an investment decision?

A. Yes soybean fields, shale mines, oil fields, you name it I will go there. I have traveled the World — from Estonia and China to Wisconsin and Mexico — looking for resource opportunities and where the actual physical commodities come from. I call it “Boots on the Ground” and our readers love it. One fascinating difference between commodities and equities are that commodities are all around us, we use them every day, we can go and touch them for the most part.

It’s quite a different experience to sit behind a trading desk and trade soybeans or to actually go out and talk to farmers who are growing them. It is one thing to trade gold and quite another to trade a mining company, it’s important (vital, really) to understand the nuances and also how does any of this data relate to one another and ultimately our trading decisions. As you well know Jack in recent years it is easy to get the fundamental information right and yet the markets go the other way.

For example, this year we knew that harvest was off to a poor start and as the year ended and farmers were harvesting their corn in the snow, well it all looked very bullish fundamentally, but overall the grain futures markets remain weak due to the global economy, so we always need

to temper what we are seeing on the fundamental side with the technical indicators that are in place and the overall sentiment of the market. In my opinion, there is no magic formula it is gathering the best of all data, analyzing the technical and in many cases seasonal and historical data and then choosing a direction and placing the trade. After that we manage the trade for risk and set clear profit objectives, discipline and fortitude are key. We will not always be right but we know that and so we always limit risk as much as possible and try to maximize gains where we can. It’s a simple strategy but often can be a challenge for a trader to stick to.

Q. Gold is the commodity seemingly on everyone’s mind. Why do you believe gold has been rising so sharply?

A. Well gold is one of those commodities that I love to hate. Just like I have fire insurance on my house, I have gold in my portfolios. The difference is I am happy to cash in the gold once in awhile. Gold is attractive for investors for the simple reason that it is a comfort commodity. Much like a bowl of warm soup on a cold winter day it makes us feel warm and secure inside. Let’s face it, as the fiat currencies around the World get beat up each week, gold is one of the few places investors can put their money and not watch it whither.
Having said that, I feel gold provides an excellent hedge and little else. I think each investor must decide for themselves but I would never have more than 10% maximum of my portfolio in the precious metals, 1-10% that’s it. Having said that I would also have at least 1-10% of my portfolio in the precious metals now.

Again, going overboard in any one commodity is absurd and gold has shot up so quickly that it may or may not have immediate significant upside. Sure the Chinese demand is growing and they may increase their reserves from only 2% to 4% and that could easily drive gold to $2000 an ounce … However my 2 gold option positions will serve me well if it does and if it does not well then I risked very little for the privilege. Balance is the key and gold provides balance, those who have none of it are making a mistake, those that have too much are also making a huge error. Remember the old saying “The cure for high prices is high prices” when people start melting down grandma’s engagement ring it may be time to look for the exit.

Q. … And will it go further: What’s your forecast for gold prices?

A. In a word Yes, much higher. Even though I may not be as excited about gold as some of the hardcore gold bugs like Peter Schiff or others I believe gold has much higher to go over the next 5-10 years, the road may be a bit bumpy though, so investors have to keep things in perspective. The growing deficits and zero interest policy of the US as well as the massive printing of endless greenbacks and stimulus is a recipe for hyper inflation down the road and I also feel that the world economy is shifting away from the Dollar as the reserve currency, not altogether but just enough to push more assets into gold, as I said earlier. Even if a small portion of the Chinese population shifts into gold merely as a hedge, say another 2% we could be talking considerably higher gold prices.

Simply adjusted for inflation gold should be about $2,600 an ounce so to me $1,800 or so seems to be the next near term target, however we could see significant swings in the meantime so to be overly positioned on the long side outright could be an untenable situation for most investors. I prefer to hold about 2-3% in actual physical gold, bullion and coins, about 1-2% in key mining shares (Barrick, Yamana etc. — we own all of these) and the rest in commodity options about 6-7%. I feel longer term call spreads offer me the easiest most cost effective way to play to longer term metals moves and with minimal risk.

Bullion and coins have their own unique problems of storage, insurance and interest costs. Mining shares, it’s important to remember, are not gold, they are gold mining companies and as such have fixed costs such as energy, labor, and are subject to the usual problems most companies have. It can be very disappointing for someone who buys mining stocks and then watches gold rally only to see their stocks go lower or stay flat, all for the reasons I indicated, this is exactly what happened during gold’s rally in 2008 as oil prices surged, the input costs were simply too much for the miners, many of which were also hedging their gold production which hurt them even more.

Q. Commodities: Do you think we are in the midst of a long-term secular bull market still, or closer to the end of the run up in global commodities prices?

A. Yes, I think we are in about the middle but a lot of that is guesswork, and the debacle of the global economy the last year and a half have derailed much of it, at least for the short term. The real critical overall factor to me is population growth. Growth isn’t really the right word, explosion is. The exponential growth in the emerging markets, especially China and India, means that demand for all resources will skyrocket. I believe that soft commodities (coffee, cocoa, sugar) Agricultural Commodities especially (soybeans, wheat, corn and rice) will face shortages and higher demand as diets improve and accessible arable land shrinks due to poor farming methods overuse and Mother Nature. Energy will also be critical as demand will overpower supplies and sustainability. Alternatives are vital but the reality is there is nothing in the pipeline (pardon the pun) that will solve the critical demand versus supply problems that are on the horizon. Raw materials such as copper, lead, zinc, and aluminum will also remain higher on my list than gold, which again is a vital yet limited hedge for our portfolio. Of course prices will reach a level of unsustainability at some point but that may not come for many years, in the meantime though as certain prices get ahead of themselves, as they did for oil at $147, we will be happy to take on some short positions to grab gains on any obvious pending correction, our overall bias is bullish though for the next several years.

Q. Do you see any connection with what happens in the commodities markets as it relates to the value of the US dollar or other currencies?

A. Oh absolutely. The two are linked at the hip, especially lately. Let’s face it, demand is low right now due to the awful global economy and much of the rally in commodities and equities for that matter, is the weak/strong dollar. Commodities I would say are right now more pegged to dollar movement then any real underlying fundamentals which are commodity specific. A significant rally in the dollar off these lows could easily suck the wind out of many of these commodity positions, as we have seen recently with gold.

However we think that any significant rally in the dollar being sustainable is highly unlikely,
still we don’t overextend ourselves on the long commodity positions at any one time just because of such risk. I think it’s important to watch what happens with oil being priced in something other than US Dollars too, if a move like that were to occur well it could be a game changer. The currency markets and commodities are absolutely interconnected though, in my opinion.

Q. I know we lump commodities together, those on the outside looking in. But I do know there are a lot of different sectors with the commodities area, e.g. food, energy, metals, etc. all having different supply and demand dynamics. Is there a particular sector you especially like and/or don’t?

A. Well, like in anything we do, it’s easy to become a ‘jack of all trades, master of none” I myself prefer not to go that route and I focus primarily on the metals, energy and to an even greater extent on agriculture, and soft commodities. I tend not to trade currency futures or financials such as S&P and NASDAQ. Now don’t get me wrong, I love the indices but just like a pediatrician doesn’t usually do cataract surgery I prefer to leave those markets to my people or others who focus on that primarily. Experts and people I respect such as you and J.R. I find that by trying to cover too many of these markets 24 hours a day, you end up missing key information and these markets vary so much it’s nearly impossible to cover it all well. Having said that, I actually started my career in the US Dollar Index pit working next to legends like Paul Tudor Jones and cut my teeth doing arbitrage between the currency pits in Chicago and the USDX so while I understand it all and love those markets, I rely on my experts to advise my readers and clients on those markets and they often rely on me to advise their clients on the other commodities, it works out well for everyone to have a team of experts concentrating on their specialties rather than some guy whose trying to do it all, and usually poorly.

Q. If a long-term investor wanted to get involved in the commodities market, how would you suggest he do it?

A. The great news today is that unlike when you and I started trading Jack, today there is such a wealth of fantastic information and tools out there that new investors can get started very easily and have access to a wealth of information. I do think it’s very important find a source you trust and that makes things easy to understand for new resource investors, without all the hype. And there is plenty of that out there as you and I both know. Instead, much like you, I feel investors need to know all of the risks at the same time as the amazing profit potential.

The first step I tell new investors to take is to pick a sector in commodities they’re interested in, say gold or oil or corn and then find an advisory service that is going to offer you the ability to hopefully “earn while you learn”. Paper trading is fine but as you and I both know, there is no comparison to actual trading, so I feel for a new investor it’s vital to put some money in the market, not a lot at first but to have an actual stake in something, maybe as little as $500- $1000 but something to have some actual stake. It can make following a particular trade more interesting, far more educational. Watching the daily inflows and outflows of equity will teach the individual about price movement, leverage and fundamental and technical factors and how they actually impact a specific trade and bottom line equity, positively and negatively. It’s one thing to hear Maria Bartiromo talking about gold moving $65 higher and quite another to see it in your own account if you’re long and just locked in 124% profit, nothing quite compares. Most of all, find an advisor or
newsletter or even broker who you trust, and feel comfortable asking questions, all of us started somewhere and the only way you learn is by asking questions.

Q. Are there any particular trades, good or bad, that stand out in your career that taught you something very valuable you can share with our Members?

A. Well I believe that psychology is critical to trading and therefore I try to keep emotion out of my trading, much easier to say than to do but we try. Having said that, brooding about losses or expecting a ticker tape parade when we have winners is counter-productive. I think I have learned far more about my trading from my losses, especially when I was younger.

While I have had incredible winning streaks and returns over the years, including triple digit returns that wouldn’t seem to quit, eventually it does. Getting away from our disciplined approach, becoming cocky or emotional, over trading, or simply not recognizing the change of a specific trend can always humble any trader. Ego has no place in trading and also I have no tolerance for traders out there who misrepresent their trading, like the guys who claim to never have losses or zero risk, it’s absurd and to me misleading. The profit potential in these markets is so high anyway I never understood why some individuals do that. Regardless, the best lesson I learned early on was when I worked in the Dollar Index, I was probably about 22 and owned a seat in the USDX and also was working as a clerk on the floor of the NYMEX, it was 1990/1991 or so. I spent my days split between trading for my own account over in the USDX and working in the crude pit. During the time leading up to the first Gulf War the markets were extremely volatile … to say the least. Crude was approaching $50 which was unheard of at the time, the Dollar was the “clear” flight to quality vehicle or so I thought. I was young and arrogant and while I was taught strict risk discipline from Paul Tudor Jones and others I thought I knew it all and rather than just buy my usual limit of around 10 USDX contracts I went long about 50, way more contracts than my comfort zone or my equity allowed, I broke the cardinal rule of overtrading … and I was about to get a quick lesson in humility. That January evening, the war started as the US began to attack Baghdad. Initially my position doubled in value and kept rising, I was a millionaire I thought, but then as the night went on and the war progressed it was clear it would not last long, and neither would the dollar rally.

I went from Park Place to Park Bench rather quickly. By morning I was on a significant margin call as the dollar had sunk along with oil prices which fell through the floor too, it was chaos on the trading floor, to say the least. The story has a happy ending though.

As the day progressed the dollar allowed me to trade out of my positions and the entire foolish mistake ended up costing me about $18k rather than close to 100k at one point. Costly yes but the lesson I learned was invaluable and I never made that type of mistake again. I don’t suggest learning lessons this way but I do suggest finding someone who has and let them teach you, it’s one of the best investments you could make.

Thank you, Kevin.

As me and my family approach the arrival of our second daughter this April, God willing, this song touches the heart.

May God bless you and you family this holiday season.