Sunday, May 15, 2011

Corn is the Rosetta Stone of the Markets and Economy

From Dragonfly Capital:
It has taken years of trading and research to come to the conclusion that Corn is the Rosetta Stone to the Financial World. Whether you are interested in the forecast for inflation, fuel costs or sovereign value or the trade off between real and paper assets, the answer can be found in Corn. To understand this you first need to shift your thinking from the view that Corn is something you eat a few months in the Summer with butter and salt on it. Start by thinking of Corn as Gold, but with a use.
Corn as Store of Value

Looking at the ratio of the Corn ETF, Teucrium Commodity Trust Corn Fund (ticker: $CORN) to the SPDR Gold Trust Shares (ticker: $GLD) above you can see the steady rise of the trend since October. It is outpacing Gold has been store of value. Not a surprise as it has real uses. Both reflect a rise in the value of real goods. But Gold also is seen as a safe haven for foreign market debt crises. Now the ratio is breaking lower. Should this continue does it forecasts that the need to own real assets is waning. Or is this just an inflation related rotation while Gold rises on global fear?...MORE
HT: The Reformed Broker