COMMODITY BULLS FIND SUMMER SUN AT LAST

Wednesday's price action was just the tonic that may well yet bring investors right back into the market over the rest of the summer. A late June malaise was brought on by fears that the economy was lunging right back into the sewer. Yet strong retail sales and a reading of industrial production that highlighted a lack of contraction have both reminded investors that stimulus packages might yet do the trick.

Rising markets often attract more enthusiasm from investors who are certainly more prone to buy when prices are rising than when prices are in decline. We try to buck that trend, something our Supreme Council has learned the hard way from an early age. Our launch of Global Resources Alert recently hopes to teach that 'down and out' philosophy to readers not yet prepared for futures trading. That's why we're sitting pretty on gains in last week's unpopular trades in which we had the guts to buy both Australian and Canadian dollars.
 
On Wednesday, equity prices rallied strongly on the back of healthy data. It didn't take long for currency traders to ditch the dollar and establish fresh short positions. And as that happened, commodity prices began to feel a fresh bid as investors moved to circumvent potential inflationary fears.
 
Cotton prices traded at the highest price since September in what summed to a four-day 7.2% rally. A one-month low for the dollar saw coffee and sugar prices both advance. Not only do commodity prices rise when the dollar falls, but they do so also when global demand for produce appears supportive. Both conditions are currently at play.
 
Yet fundamental forces remain at play in the coffee market where fears over frost damage to the Brazilian coffee crop have suddenly taken a back seat. Prices had fallen as much as 20% since a peak at the stat of June. The potential for rising supply has been an albatross around the neck of the coffee market.
 
Sugar prices also rose for four back-to-back gains. The big market rally has focused on too little supply from India, which is the world's largest user of sugar, and of course this year turned importer thanks to poor harvests. For that you can blame the monsoon season.
 
 Gold prices felt the benefit from a rise in energy prices at the same time the dollar fell. Gold is the ultimate investment for those fretting over longer-term inflationary pressures coupled with dollar weakness. Gold futures were one of our recommended trading vehicles earlier this week to readers at Jurojin Weekly. Sadly, wile we called the market right the market failed to dip to our recommended entry point before trading at what would have been a swift $632 gain in just two days.
 
We also failed to get short within the same publication of 10-year treasury notes. This week we told readers to SELL notes when the yield was 3.34%.
 
"The rally lost steam towards the end of last week as yields reached 3.3%. A better environment for the banking system as earnings season gets underway could see yields head back to 3.5%." - Jurojin Weekly - July 14, 2009.
 
Yields rose today to 3.58% as prices came within an ace of our target price.
 
Silver prices followed gold and copper rose too. And only a fool would have been short with prices rising to a 10-month peak. While we appreciate the potential loss of supply owed to diseased crops or trees it's harder to appreciate the loss stemming from real-estate development that one news report cites. Really - in this environment? We think that fears over a possible El Nino development panning out is a far more appropriate rationale for a wave of buying.

The Supreme Council of the Secret Order of Jurojin