Busting Loose

"I love this plan. I'm excited to be a part of it. Let's do it!"
--Dr Peter Venkman (Ghostbusters)

Jim Rogers just did another couple of interviews on Bloomberg about ags, oil, and other commodities. He cleared up one issue I've been struggling with. I've been on board with the so called 'demand destruction' thesis that says commodities will decline in a slowing economy.

The carnage in the commodity space certainly suggests that this is happening.

But Rogers remains bullish, noting that supply is contracting with demand, as producers retire capacity and take new projects off the board with prices smelting lower. Rogers therefore contends that commodities will emerge from this period with fundamentals unimpaired (i.e., supply will continue to outstrip demand).

In past contractions, such 'supply destruction' has caused shorter and shallower declines in commodity prices than in stocks, and led to reestablishment of bull trends when markets firmed.
This is a well reasoned thesis, and it fills in the 'hole' that I thought was present in JR's thought process. Given the massive interventions taking place in global financial systems, as well as the pounded down nature of commodity price, I am now planning to slowly increase my commodity exposure--perhaps to double 2x my current non precious metal commodity holdings.

I will be focusing on the ags, base metals, and energy sector commodity ETFs such as RJA, RJZ, JJE.

positions in RJA, RJZ, JJE