Six Ways to Profit From Jim Rogers’ Prediction that Sugar is Sweeter than Gold
Today’s Daily Angle comes from Bob Blandeburgo of Wikinvest Wire members MoneyMorning.com. You can read the full article on the Money Morning blog.
Flash Player 9 or higher is required to view the chart Click here to download Flash Player nowGlobal investing icon Jim Rogers is shifting his sights from gold to sugar.
And with good reason.
Sugar prices have zoomed more than 80% since the start of the year – eclipsing the 21-cent-per-pound mark for the first time in 28 years. But Rogers says there’s more room to run: Even after its scorching advance this year, sugar remains 70% below the record peak it hit in 1974.
Given that kind of profit potential, Rogers is much more bullish on sugar than he is on gold.
“Sugar is still very depressed on any kind of historic basis and I suspect it will go higher,” he said recently. “I wouldn’tsell sugar. I don’t know if it is going to go up in the next week or the next month, but I am certainly expecting sugar to go much higher during the course of the bull market over the next several years.”
Six Possible Sugar Plays
Assuming you agree with Rogers’ sentiment about the Sugar Markets, there are several ways that investors may capitalize on this bullish long-term outlook for sugar. They’re all worth a look.
- The “purest” sugar play – and also the shortest-term – is an investment in sugar futures, available on ICE in 112,000-pound contracts. The No. 11 contract trades global raw sugar, while the No. 16 contract trades the U.S. market, according to Commodity Online.
- Also, futures investors seeking an exchange-traded play on sugar can check out the futures-based iPath Dow Jones AIG Sugar Total Return Sub-Index ETN (SGG), an Exchange-Traded Note (ETN). As of the close yesterday, this ETN had posted a year-to-date return of 62.1%.
- Although a bit more broadly based, the Deutsche Bank AG (DB) managed PowerShares DB Agricultural ETF (DBA), an Exchange-Traded Fund (ETF), does include sugar as part (16%) of its holdings. Other holdings include soybeans (31%), wheat (28%) and corn (23%) – that last holding being a major near-term potential beneficiary if high sugar costs induce foodmakers to switch over to corn-based sweeteners. The fund is down about 3% so far this year.
- The ELEMENTS Rogers International Commodity Agriculture ETN (RJA), tracks 20 futures contracts worldwide. It’s down about 6% this year.
- In terms of pure agriculture-related investment plays, there’s the Van Eck Market Vectors Agribusiness ETF (MOO), a fund that really reflects the breadth of the agriculture sector, with holdings apportioned across such agricultural sub-sectors as chemicals, agri-product operations, equipment, livestock operations, and ethanol/bio-diesel. It’s up 39.2% so far this year.
- Although not a sugar play, per se, if you believe that sugar-cane-based ethanol – and other sources of alternative energy – will be an inevitable part of the global future, consider the following “green” ETF: thePowerShares WilderHill Clean Energy Fund (PBW), one of the better-quality funds that focus on “clean” technology as determined by the WilderHill Clean Energy Index. It’s up 17.2% this year.
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