Best Sectors To Put Money In Right Now [PowerShares DB Agriculture Fund, Market Vectors Junior Gold Miners ETF]

bullish buyPeter Krauth: Markets clearly move in cycles, and commodities are no exception.

In fact, resources as an asset class are prone to the most extreme examples…

The good news is that recognizing and embracing these boom/bust cycles can make for huge profits.

And right now, a boom is clearly taking shape…

A number of commodities subsectors have already erupted on a dramatic surge upward…

And some equally dramatic indicators point to them heading much higher still…

The Signs Are Already Here

sector rally

The TSX Venture Exchange is home to over 1,100 junior mining stocks. While not perfect, this exchange’s index is widely used as a proxy for the health of junior mining, which comprises about half the index.

After peaking near 2,300 back in early 2011, the index has tanked over the past three years, losing about 63% of its value.

But more recent action has taken the index from 880 in late December to 1,043 more recently, for an impressive 19% gain in just two and a half months.

If we drill down into other subsectors, the action gets more enticing…

The Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) has done even better. After bottoming near $29 in late December, shares of this ETF have exploded higher, recently peaking near $43. That translates into a stunning 48% return in just two months on volume that was triple the norm.

But the strong commodities action doesn’t end there…

Global Uncertainty Is Only Fueling This Surge

Despite several years of easy money central bank policies and excessive money printing, “official” inflation has remained tame. But the story’s different down in the trenches.

Government statistics like the Consumer Price Index (CPI) might tell you inflation is mild at around 1.5%…

But that’s only if you don’t eat.

Food prices are up sharply. Corn has gained 13%, sugar is up 22%, wheat is up 20%, and coffee is up 79%, all in just the last seven weeks! And more is likely in store.

Two of the reasons are geopolitics and failed government policies. Venezuela has seen its fair share, with escalating violence and regular protests against crippling inflation and incessant food shortages.

Ukraine has long been considered the breadbasket of Europe. More than two-thirds of Ukraine is arable and highly fertile land, and 17% of agricultural exports go to Europe while 20% go to Russia. In the days of the Soviet Union, the Ukrainian Soviet Socialist Republic accounted for a full 25% of all Soviet agricultural output.

So it’s no stretch to see that recent events between Europe, Ukraine, and Russia have compounded the effects on grain prices. There’s no saying what might happen if tensions flare up further.

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