How many bagels are there in a packet these days?

Have you noticed how food manufacturers try and stop you noticing that their putting less in the packets than they used to? I had 'bagels' on my shopping list a while back (my two boys love them with a cooked breakfast at the weekend), and when I was in Waitrose I noticed that some 'new' bagels were being advertised: 'caramelised onion' flavour, Mmmm! It was only when I was going to put them in the trolley that I realised that there were four bagels in the packet, not five. Basically the manufacturer was diverting my attention from this fact by advertising a 'new flavour' of bagel. The price of a packet of four bagels is the same as the price was for a packet of five bagels, but you get 20% less bagels. This is a massive inflationary hike!

Why is this so? Well, it's all about profit, of course. Manufacturers costs when making bagels include wages and tax etc. But they also include raw materials. Well, raw materials have been getting cheaper for some time now. But this may be about to change. You would have thought that the anti-sugar lobby would be making sugar so unpopular now that its price would be falling. 2016 06 04 SUGA

But is seems to be starting to rise! Above is a weekly graph of the price of the ETF SUGA over the past five years. The green line is the ma52, in other words, the price of the ETF over the past year (52 weeks in a year, of course). The price of SUGA has gone up 50% in the past ten months months, from a low of $8 to $12 last week. That's quite an increase!

Sugar is not the only commodity that seems to be rising in price. the ETF CORN is a measure of the corn price. Here is its 10yr weekly graph.2016 06 04 CORN

The price has moved up above the average for the year. Will it continue to rise? Who knows! A price rise above the yearly  average price  could perhaps be interpreted as a change in sentiment from bearish (negative) to bullish (positive).

Other commodities seem to be rising in price too. Have a look at the graphs of coffee and wheat. I think they are graphs with potential.

So, it is possible to benefit from increases in commodity prices by buying the 'exchange traded commodities' (ETCs) which are like ETFs. They can be bought and sold easily at the click of a button. I do hold some of these in my trading ISA. You might be interested in the website of ETF Securities, who have a range of exchange traded commodity products that can be bought through a broker.

Another simple way to benefit from an increase in commodity prices is by buying shares in an investment trust that invests in commodities. The graph below compares the price of the commodity investment trust that I use for exposure to commodities. The black line represents the price. The yellow line is the price of the US stock market (S+P 500)2016 06 04 stocks versus commodities

I do this in my asset allocation with timing trading system in my trading ISA. Members of my website know what I invest in and when I invest in it. I aim to gain from rises in the prices of assets, but avoid the massive drops in price that do (regularly) occur. You would not want to have been invested in commodities in the past five years. Look at the graph and see how badly commodities have fared. There is now an argument that they are starting to represent good value and investors are seeing this. I made an investment in this investment trust a few weeks ago.

If you are interested in becoming a member of my trading site, get in touch. You will have access to my trading systems and hear about and see my trades as they occur daily, via the private Facebook page. It's all about what I do. I do not give advice and am not a financial advisor.

I wonder when they will reduce the number of bagels in a packet down to three?  Have a good week!

Comments

Popular posts