Silver as an investment

The Contrarian Play in Your Morning Coffee

Be prepared for the next great transfer of wealth. Buy physical silver and storable food. / by Andy Hecht / September 6, 2012

Any successful investor will tell you that the best profit potential lies in going against the crowd.

Over the course of my three-decade trading career, that’s a lesson I have seen pay off on many occasions.

If the price of a commodity (or any asset) is depressed, I look for flaws in consensus opinion. In 1995, I did just that with silver when the price was below $5 and no one on earth wanted it. The same was true earlier this year, when the price of natural gas dipped below two bucks.

Today, I’m watching a commodity that most of us are intimately familiar with on a daily basis: coffee. Right now, it seems every analyst in the world is bearish on coffee. But from where I’m sitting, the price of coffee, which has been depressed for most of the year, is showing signs it’s about to take off.

While this gives us a great opportunity to make a contrarian play, it also gives us a chance to make sure we protect our portfolios from companies that could take a big hit from coffee’s rise.

A Down Year for Coffee Prices

After peaking at more than $3 a pound in May 2011, the price of coffee has plunged. Bountiful crops in Brazil, Vietnam, Colombia and Indonesia (as well as other coffee-producing nations) easily met global demand.


Thanks to BrotherJohnF