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$34 Soybeans...Fantasy or Possibility?

Contributed by Jake Bernstein

If you think that my headline is a clear indication that I have finally lost my marbles then perhaps you may change your mind when you consider this possibility in the context of history. Specifically I refer to the 1970’s experience in the soybean (and many other) markets. Given the confluence of cycles, COT commercials accumulation, central bank massive money printing and timing indicators, I believe that the stage is being set for a 1970’s style commodity price inflation “blow off”. Gold and silver have led the way. While it is likely that gold and silver have not yet made their highs, the odds are growing daily that many if not all of the other commodity markets will make similarly large gains over the next few years. I discussed the details of my expectation in a 2 hour Webinar which you should attend if you have not already done so. It was one of my most detailed Webinars and while I made some stunning forecasts for the next few years I believe that they are reasonable as well as based on facts and not fictions.

Among my forecasts was the realistic possibility that soybean prices could reach the $34 level over the next few years. While producers may rejoice and perhaps even see that this is possible based on fundamentals, many traders will likely consider this forecast to be “off the wall” or just not possible. Before you dismiss my forecast as unrealistic, I urge you to consider the chart below. It shows the 1970’s bull market in soybean futures – a bull market that developed in underlying economic and cyclical conditions that were, if anything, less extreme than what exists today. Now, after reviewing the chart, consider the current chart for soybeans with a similar % increase projection. What do you see?


Now that you have had a look at the soybean bull market of the 1970’s consider the “what if” scenario with regard to the current soybean market. Buy why do so? Here is the logic:

Soybean cycles are long term bullish
Fiat money printing all over the world has made virtually all paper backed currencies unpalatable forcing many professionals and savvy investors into tangible assets
Demand for grains and feeds continues to be strong
Based on the monetary and fiscal policies that have been rushed into place in order to prevent an economic collapse, the odds favor significant commodity price inflation for the next few years and
Precious metals accumulation continues to underscore a flight from paper currency into hard assets. This trend has started to spread to all tangible commodities
If soybean prices repeat their 1970’s experience then the chart below shows what could happen over the next few years. Is it impossible? Before you say that this can’t happen consider all of the “this can’t happen” events of the last 25 years. Now take a look at the chart again. I realize that I’m going out on a limb with my forecast but many of my cyclical forecasts over the years have been correct.


Now add to the mix the fact that Commercials as assessed by the Weekly Commitment of Traders Report using my analytical method (available in the Jake Bernstein MetaStock Plug In) shows strong accumulation of long positions virtually across the board in many of the grain markets. Time will tell If I am right but the confluence of fundamentals and technicals is noteworthy. In light of the recent grain report which resulted in a collapse of grain and soybean prices some of you may not take my forecast seriously. If, however, you see my logic this may be the decline that leads to the buying opportunity of great importance. Would I “catch the falling knife” by entering now? No! I’d wait for my intermediate term timing triggers to turn bullish (also available in the Jake Bernstein MetaStock Plug In).


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Support Tip
How can I scroll through a MetaStock chart one bar at a time?

Contributed by Equis Support

Metastock Pro & MetaStock EOD: 6.52 – 11

Open the desired chart in MetaStock.
Hold down the "Shift" key on the keyboard.
While you are holding down the "Shift" key, left click once on the right or left arrow of the scroll bar of the open MetaStock chart. This will only move one bar to the left or right.

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