This Could Make You Rich…Someday

Wednesday, 11 July 2018
Melbourne, Australia
By Bernd Struben

  • Just a spoonful of sugar
  • Not dead yet
  • ‘Leyonhjelm Trashes Hanson-Young’s Claim to Represent
    “Women Everywhere”’

‘This could make you rich,’ legendary commodities investor Jim Rogers declared. He held up a packet of sugar in front of the crowd of 600 investors.

That was back on 27 October, 2016. Jim was speaking at the Sheraton Mirage in Port Douglas. We’d invited him as one of the keynote speakers at Port Phillip Publishing’s investment summit, ‘The Great Repression’.

You’re probably familiar with Jim Rogers. There’s a good reason his name is often preceded by the honorific ‘legendary investor’. You see, he began trading the stock market in 1968 with only $600. By 1979 he’d retired a multi-millionaire.

A good bit of his success stemmed from the Quantum Fund, which he formed together with George Soros. Over the 10-year span of the fund, they helped achieve a 4,200% gain. Over that same time the S&P 500 only returned 47%.

But back to sugar…

‘Put a few in your pocket,’ Jim continued, a bit tongue in cheek. He waved the Sheraton Mirage cafeteria sugar packet at the crowd. ‘Give them to your kids. They’ll thank you for it.’

Putting aside the fact that your kids would more likely eat the sugar than store it for its wealth building potential, Jim was making a serious point.

There’s big money to be made in soft commodities like cocoa, coffee and sugar. If you get the timing right.

More after the markets.

(By the way, we sold out of tickets for ‘The Great Repression’ conference in a matter of weeks. But we hired a professional film crew to record the entire event so that all of our subscribers could ‘virtually attend’. Every keynote speaker. Every breakout session. Everything. You’d be surprised by just how much of the insight that was presented is still incredibly valuable and relevant today. Go here to learn more.)


Overnight the Dow Jones Industrial Average closed up 143.07 points, or 0.58%.

The S&P 500 gained 9.67 points, or 0.35%.

In Europe the Euro Stoxx 50 index finished up 12.87 points, or 0.37%. Meanwhile, the FTSE 100 gained 0.05%, and Germany’s DAX rose 65.96 points, or 0.53%.

In Asian markets, Japan’s Nikkei 225 is down 229.58 points, or 1.03%. China’s CSI 300 is down 1.92%.

In Australia, the S&P/ASX 200 is down 43.30 points, or 0.69%.

On the commodities markets, West Texas Intermediate crude oil is US$73.85 per barrel. Brent crude is US$78.42 per barrel.

Turning to gold, the yellow metal is trading for US$1,253.38 (AU$1,689.65) per troy ounce. Silver is US$15.96 (AU$21.52) per troy ounce.

One bitcoin is worth US$6,380.56.

The Aussie dollar is worth 74.18 US cents.

♫ Just a spoonful of sugar ♫

As mentioned above, you can potentially make big money investing in soft commodities. But like with all investments, timing can make all the difference.

And despite his wildly successful investing career, Jim Rogers readily admitted to the crowd in Port Douglas that he’s always been terrible at timing the markets. Which certainly turned out to be true with his tip on sugar!

Have a look at the chart of the SB1:COM Generic 1st ‘SB’ Future below. (The futures price of sugar.)

SB1:COM Generic 1st 'SB' Future  11-07-18

Source: Bloomberg

[Click to enlarge]

The line near the middle of the chart is the price of sugar on 28 October 2016, the day after Jim’s presentation. At the time sugar was trading for US$22.16 per pound. That was down a touch from a high of US$23.42 per pound on 7 October.

As you can see it’s been pretty much downhill from there to today’s price of US$11.41 per pound.

So what’s going on here?

Well it turns out the world is awash in sugar. Production is up. And while global demand is still growing, the pace of that growth is slowing.

From Bloomberg:

Consumers have become increasingly wary of the health impact of their sweet tooth, and companies from canned-fruit maker Del Monte Foods Inc. to snack-food seller Mondelez International Inc. are touting products made with less sugar. While global consumption is still rising, the pace of growth has slowed to an average 1.4 percent in recent seasons, down from 1.7 percent over the past decade, according to researcher Green Pool Commodity Specialists…

World stockpiles are set to swell to the highest ever this season and stay near the record next year, according to the U.S. Department of Agriculture. Sugar futures in New York have already slumped 25 percent in 2018. That’s the biggest loss on the Bloomberg Commodity Index, which tracks returns for 22 components.’

Jim Rogers, I dare say, might take this opportunity to double down on his sugar holdings.

But holding onto any investment — let alone buying more — as it halves in value is a risky bet. And one best made by investors with deep pockets, nerves of steel, and plenty of patience.

The gloomy mid-term outlook, however, could prove to be good news for sugar intensive stocks like PepsiCo, Inc. [NASDAQ:PEP] and The Coca-Cola Co [NYSE:KO].

Pepsi’s share price leapt 4.76% in Tuesday’s trading, following the release of the company’s quarterly earnings report. That’s a big daily move for a company with a market cap of US$162.7 billion (AU$219.3 billion).

The stronger than expected earnings, however, were driven more by the success of Pepsi’s salty snack foods, like Doritos and Cheetos, than its trademark soft drinks.

Nonetheless, continuing low sugar prices should help boost the company’s profitability. While health campaigners — backed by nanny staters calling for sugar taxes — should keep a lid on the growth outlook for its dreaded sugary drinks.

Speaking of…

Not dead yet

Is it just me or is the push for a sugar tax in Australia like the arch-villain in some late night B-movie.

You know, the one where the bad guy goes off a cliff in a car that then explodes and you think he’s dead. Only to discover he survived and is now hiding in the heroine’s coat closet. After which he’s eventually electrocuted with a toaster in the bathtub. Surely, he must be dead now, right? Not so fast. Who’s that peering through the bedroom window?

You guessed it. The nanny staters with their sugar tax proposal. The same proposal that’s been rejected again and again…only to reappear seemingly unscathed.

‘Time for action on sugar and obesity’. So reads the editorial headline in The Age on 26 June.

‘[A]ccording to the Commonwealth’s own figures, 28 per cent of Australian were obese in 2014-15, an increase of 9 percentage points since 1995…

The cost of letting the obesity epidemic spiral out of control is enormous. Obesity is linked with heart disease, diabetes and many other ailments. It is particularly harmful to the poor and the young…

The Grattan Institute has found soft drinks – or, more precisely, our inability to enjoy them in moderation – are responsible for about a tenth of our obesity problem. The World Health Organisation recommends a maximum of six teaspoons of added sugar a day; a can of Coca-Cola has 10 teaspoons…

Unfortunately, they [falling sales of sugary drinks] are not dropping enough, which is why the time has arrived for a sugar tax, similar to the taxes that several dozen countries, including Britain, have introduced.’

Now admittedly, I write to you with the crumbs of devoured bickies and an empty can of coke on the desk beside me. Yet my waistline remains on the trim side.

Perhaps that’s because, as The Age suggests, I am neither poor nor young. Though there was a time when I was both, without ever suffering the ‘particularly harmful’ effects of sugar.

More likely it’s because, like the vast majority of Aussies, I do enjoy them in moderation. And, well, I get my bottom off the couch and exercise every day as well. Not to mention brushing my teeth.

It’s not that hard. Everyone can do the same…if they choose.

If, on the other hand, they choose to remain largely inert as they guzzle cokes and stuff their face with Tim Tams…well, that’s their choice too. (Unless they’re kids, in which case we defer to the parents.)

At the end of the day it’s not the government’s responsibility to dictate your health. Australians are already saddled with plenty of crushing sin taxes.

There’s a reason that slab of beer is so pricey. And a reason why Aussies pay more for a pack of smokes than any other people in the world…a scenario that’s given birth to a thriving, billion dollar black market for tobacco.

The last thing we need is to fork over more of our hard-earned money for yet another government sin tax. Especially as the Grattan Institute estimates soft drinks are only responsible for 10% of the obesity problem.

The answer won’t be found by adding another layer to government bureaucracy. But by collectively taking personal responsibility.

Finally, here’s the latest on our esteemed politicians’ ‘slut-shaming’ saga, from The Australian Tribune:

‘Leyonhjelm Trashes Hanson-Young’s Claim to Represent “Women Everywhere”’

You could reasonably argue that claiming to represent women everywhere is sexist.

After all, every woman is a unique individual. And saying you speak for every one of Australia’s roughly 13 million women could be taken as the height of egotism…and sexism.

Yet that’s precisely the claim Greens senator Sarah Hanson-Young is making in the defamation lawsuit she’s…’

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

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