“Picture this for a moment…” I wrote in the latest issue of my True Wealth newsletter…

Picture me at a cocktail party, trying to tell people… “I’m so excited! I’m buying grains! You know – soybeans, wheat, and corn? They’re SOOO cheap! The timing is great!”

Sounds ridiculous to say that, right? It’s all true about the opportunity in grains… but nobody cares.

Yes, it sounds silly to talk about buying grains as an investment at a cocktail party these days…

[ad#Google Adsense 336×280-IA]But that is the point…

For the biggest gains, you MUST consider buying what nobody else is interested in. But that’s not all you need. Today, I’ll show you the two elements you want to see as the perfect setup for a great trade…

My issue of True Wealth published on May 20. Grains are up more than 10% in the 12 trading days since that issue came out.

My True Wealth subscribers are up much more than that…

I actually recommended buying the iPath Bloomberg Grains Total Return Fund (JJG) in February. JJG is basically a fund that holds three grains: wheat, soybeans, and corn.

We timed the bottom pretty darn well… JJG fell from more than $60 in late 2012 to less than $30 this past March. Take a look:

JJG was in free fall… So what did we see back then to make us buy?

What I wrote in the February issue summarized it…

Prices for agricultural crops have been falling fast. The price of wheat, for example, is down roughly 50% since 2012. The other big “grains” – corn and soybeans – have fallen even farther.

Speculators have been piling on this downtrend… The bets against the price of wheat have hit all-time record levels among commodity traders.

U.S. farmers are so paralyzed by these lower prices, they are afraid to plant. Why plant something that you will lose money on when you harvest it?

We have record fear in wheat – with no supply coming from U.S. farmers, and record bets against the price of wheat. Corn and soybeans are in similar positions, though not as extreme.

Ah, but what’s this? We are starting to see a divergence between sentiment and price action.

Even though fear is high in the “grains,” prices are actually up since the start of this year – in a world where everything else is down.

The outlook is bad… and yet prices are up this year. This is exactly what we want to see.

There you have it: The outlook was bad, yet prices were up.

That’s what you want to see.

When the divergence between sentiment and price action appears… bingo! You have the two elements together that you want to see in a perfect trade setup.

Our grains trade is just one example…

We bought JJG at around $30 in True Wealth. And we’ll sell at around $40. We’ve only been in the trade a couple of months, but JJG is already up to $37… So it has been a great trade.

The grains trade is just one example of using this simple little “system.” In short, you want to buy what’s uncomfortable to buy. You want to buy when the outlook is bad, and everyone is ignoring it… but meanwhile, the price has quietly started to go up.

When you find that setup… take advantage of it!

Good investing,



Source: Daily Wealth