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The Single Best Commodity Play of 2013?


Big money is going long on coffee with expectations that prices will rebound next year.

Coffee prices have fallen more than 50% since 2010, which can be seen through iPath DJ-UBS Coffee Subindex Total Return SM Index ETN (NYSEARCA:JO), which is a coffee exchange-traded fund. This investment seeks to replicate the returns that are potentially available through an unleveraged investment in coffee futures contracts as well as the rate of interest that could be earned on cash collateral invested in specified Treasury bills.

Weekly, Hourly, and Seasonal Chart of JO, the Coffee Exchange-Traded Fund

The top weekly chart shows my price targets for 2013 while the lower hourly chart shows strong on balance volume, which means that big money is slowly building a long position in coffee. The small white chart is the seasonal chart of coffee futures, showing prices historically rise from January to March; then there is a correction followed by another rally into May.

Coffee prices are still in a downtrend, but it looks as though the end is near. If played properly, it could provide up to 100% return on your capital in 2013.

Coffee Futures Monthly Long-Term Chart

This chart gives you a bird's eye view on where coffee prices are trading in the big picture scheme of things.

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No positions in stocks mentioned.

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