I love a hated investment…
I want to buy when everyone else has given up… when no one else can stomach the idea of buying.
That’s where we are in the commodity markets today. Prices have been falling for years. And investors aren’t interested.
Today, a certain commodity is in an even better position. It recently hit the most hated level we’ve ever seen. And it’s now beginning an uptrend.
That means we could see gains of up to 31% over the next year, based on history. And best of all, there’s a simple way to make the trade.
Here are the details…
Commodity prices are up this year… But not everything has recovered.
Today’s opportunity is down 29% over the past year. It recently hit its most hated level ever. But the trend appears to be back. That means big gains should be on the way.
I’m talking about sugar…
Sugar has crashed. The price per pound is down nearly 60% since peaking in 2010.
Not surprisingly, investors are scared. They’re more negative than ever, based on the Commitment of Traders (COT) report.
The COT report details the real-money bets of futures traders. It tells us whether traders are excited about or disinterested in an asset.
That means it’s a useful contrarian tool… When traders all agree on an outcome, it’s a good idea to bet against them.
And futures traders have become extremely bearish on sugar in recent months. Take a look…
The COT report hit its most negative level ever in August, -77,495. And it has only rebounded slightly to 34,270 since then.
This negativity is a good thing for us. It’s setting up for a fantastic investment opportunity, based on history.
You want to own sugar when it’s this hated. Since 2000, sugar prices have soared when the COT fell below and then rose back above -35,000. The table below has the full returns…
Sugar prices have risen steadily over the past 17 years, with typical annual gains of 5%. But owning sugar when it’s this hated has led to dramatically higher returns.
Similar extremes led to six-month returns of 17% and one-year returns of 31.4%.
Those are huge gains. They’re many multiples of what you could typically expect in this commodity. And these extremes are rare… We’ve only seen this happen nine times since 2000.
Importantly, sugar prices have rebounded in recent weeks…
The simplest way to own sugar is the iPath Bloomberg Sugar Subindex Total Return ETN (SGG). SGG shares are up double digits in a little more than a month.
This isn’t a screaming uptrend. But it’s movement in the right direction. And history tells us much larger gains should be on the way.
We could easily see double-digit gains over the next few months. And returns of as much as 31% over the next year are possible.
This is a perfect “hated” investment. And shares of SGG are an easy way to make the trade.
If you’ve been looking to put money to work in commodities, this is a place to consider right now.