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commodities for dummies by amine bouchentouf

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commodities for dummies

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commodities for dummies by amine bouchentouf

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commodities for dummies® published by wiley publishing inc 111 river st hoboken nj 07030-5774 www.wiley.com copyright © 2007 by wiley publishing inc indianapolis indiana published by wiley publishing inc indianapolis indiana published simultaneously in canada no part of this publication may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical photocopying recording scanning or otherwise except as permitted under sections 107 or 108 of the 1976 united states copyright act without either the prior written permission of the publisher or authorization through payment of the appropriate per-copy fee to the copyright clearance center 222 rosewood drive danvers ma 01923 978-750-8400 fax 978-646-8600 requests to the publisher for permission should be addressed to the legal department wiley publishing inc 10475 crosspoint blvd indianapolis in 46256 317-572-3447 fax 317-572-4355 or online at http www.wiley.com/go/permissions trademarks wiley the wiley publishing logo for dummies the dummies man logo a reference for the rest of us the dummies way dummies daily the fun and easy way dummies.com and related trade dress are trademarks or registered trademarks of john wiley sons inc and/or its affiliates in the united states and other countries and may not be used without written permission all other trademarks are the property of their respective owners wiley publishing inc is not associated with any product or vendor mentioned in this book limit of liability/disclaimer of warranty the publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties including without limitation warranties of fitness for a particular purpose no warranty may be created or extended by sales or promotional materials the advice and strategies contained herein may not be suitable for every situation this work is sold with the understanding that the publisher is not engaged in rendering legal accounting or other professional services if professional assistance is required the services of a competent professional person should be sought neither the publisher nor the author shall be liable for damages arising herefrom the fact that an organization or website is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or website may provide or recommendations it may make further readers should be aware that internet websites listed in this work may have changed or disappeared between when this work was written and when it is read for general information on our other products and services please contact our customer care department within the u.s at 800-762-2974 outside the u.s at 317-572-3993 or fax 317-572-4002 for technical support please visit www.wiley.com/techsupport wiley also publishes its books in a variety of electronic formats some content that appears in print may not be available in electronic books library of congress control number 2006934824 isbn-13 978-0-470-04928-0 isbn-10 0-470-04928-6 manufactured in the united states of america 10 9 8 7 6 5 4 3 2 1 1o/rt/rr/qw/in

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about the author amine bouchentouf is president and chief executive officer of renaissance investment advisors llc renaissance is an international financial advisory firm headquartered in new york city which provides long-term strategic advice to individuals institutions and governments around the world amine is a world-renowned market commentator and analyst and has appeared in media in the united states great britain france the united arab emirates and brazil he is a member of the national association of securities dealers and the authors guild and is also involved with the council on foreign relations he offers regular market intelligence briefings through the web site www.commodities-investor.com amine holds a degree in economics from middlebury college in his spare time he enjoys playing golf traveling and socializing with friends this is his third book.

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dedication this book is dedicated to my most steadfast supporters my family you have always been there for me when i needed you and have always supported me in every endeavor i decide to undertake i would not have been able to accomplish half the things i ve done without your tremendous support and for that i am deeply grateful author s acknowledgments i was completely thrilled when wiley approached me about working on a second book for the for dummies series i knew right off the bat that this was going to be a very ambitious project that would require a lot of focus the challenges in writing a book of this scope were numerous and enormous first both wiley and i sought to create the most comprehensive guide on the subject available to investors i believe we succeeded because commodities for dummies covers over 30 commodities besides the commodity research bureau yearbook no other introductory book includes coverage of so many commodities second wiley and i also wanted to bring this book to market sooner rather than later working pretty much around the clock seven days a week i was able to hand in the manuscript in four months five months total when editing and reviewing are factored in every author who takes on a project of this size realizes very quickly that the undertaking cannot possibly be done alone despite romantic clichés about writers locked up in attics writing feverishly and not communicating with the outside world for months on end one quickly realizes that writing a book of this kind is really a team sport fortunately i had the pleasure of working with a wonderful team of dedicated professionals both in publishing and in finance first i d like to acknowledge the first-rate editorial team at wiley for their input and assistance through every stage of this process every writer hopes for nothing more than to have a team of editors who will support their general creative vision and i was extremely fortunate to have been able to follow through on my vision for the book from the drafting of the table of contents down to the inclusion of technical charts and figures with the guidance of a knowledgeable group of editors specifically i d like to thank laura peterson nussbaum my project editor for providing valuable insight through every step of the way i d also like to express thanks to stacy kennedy for helping launch the project early on and for her continuous input throughout the writing period and i would also like to show my gratitude to the graphics department for helping me express my ideas and illustrate my points with the help of charts graphs and other helpful visuals finally i would like to thank noel jameson who served as technical editor.

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because the financial markets in general and the commodities markets in particular are so broad and deep getting insight on all the different aspects of the markets is absolutely critical i was very fortunate that i could turn to some of the sharpest minds in finance for their insight on the markets i d like to thank dr scott pardee at middlebury college for providing me with cuttingedge analysis on the cyclicality of the markets i d also like to acknowledge the contributions of ray strong at goldman sachs regarding all aspects of the energy markets thanks to karen treanton at the international energy agency in paris for providing me with all the vital statistical information on the energy industry i would like to express my appreciation to john d phillips and neil mcmahon at alliance bernstein for their world-class research kevin rich at deutsche bank shared with me his knowledge of managed funds and thanks to everyone at the nymex for their support jim newsome madeline boyd sam glasser linda rapacki and jenifer semenza additional thanks goes to frank ahmed at bear stearns and richard adler for their general guidance i also need to acknowledge the contributions of elisa castro heather balke and of course my agent mark sullivan finally i d like to express my gratitude to my family whose support was instrumental throughout this process.

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publisher s acknowledgments we re proud of this book please send us your comments through our dummies online registration form located at www.dummies.com/register some of the people who helped bring this book to market include the following acquisitions editorial and media development project editor laura peterson nussbaum acquisitions editor stacy kennedy technical editor noel jameson editorial manager michele hacker carmen krikorian editorial assistants erin calligan joe niesen david lutton leann harney cover photo © markusson photo/getty cartoons rich tennant www.the5thwave.com composition services project coordinator erin smith layout and graphics lavonne cook brooke graczyk clint lahen barbara moore barry offringa lynsey osborn heather ryan alicia south anniversary logo design richard pacifico proofreaders melanie hoffman jessica kramer indexer techbooks publishing and editorial for consumer dummies diane graves steele vice president and publisher consumer dummies joyce pepple acquisitions director consumer dummies kristin a cocks product development director consumer dummies michael spring vice president and publisher travel kelly regan editorial director travel publishing for technology dummies andy cummings vice president and publisher dummies technology/general user composition services gerry fahey vice president of production services debbie stailey director of composition services

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contents at a glance introduction 1 part i commodities just the facts 9 chapter 1 investors start your engines an overview of commodities 11 chapter 2 earn baby earn why you should invest in commodities 25 chapter 3 is investing in commodities only for the brave 41 chapter 4 get ready to rumble commodity bulls vs bears 51 chapter 5 feel the love welcoming commodities into your portfolio 61 part ii getting started 77 chapter 6 show me the money choosing the right manager 79 chapter 7 track and trade investing through commodity indexes 97 chapter 8 understanding how commodities exchanges work 115 chapter 9 back to the future getting a grip on futures and options 133 chapter 10 technically speaking using technical analysis 151 part iii the power house how to make money in energy 167 chapter 11 it s a crude crude world investing in crude oil 169 chapter 12 welcome to gas vegas baby trading natural gas 189 chapter 13 fuel for thought looking at alternative energy sources 201 chapter 14 totally energized investing in energy companies 217 part iv pedal to the metal investing in metals 233 chapter 15 getting the glitters investing in gold silver and platinum 235 chapter 16 metals that prove their mettle steel aluminum and copper 253 chapter 17 weighing investments in heavy and not-so-heavy metals 265 chapter 18 mine your own business unearthing the top mining companies 273 part v going down to the farm trading agricultural products 283 chapter 19 breakfast of champions profiting from coffee cocoa sugar and orange juice 285 chapter 20 how to gain from grains trading corn wheat and soybeans 297 chapter 21 alive and kicking how to make money trading livestock 307

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part vi the part of tens 315 chapter 22 top ten ways to invest in commodities 317 chapter 23 top ten market indicators you should monitor 321 chapter 24 ten or so resources you can t do without 327 part vii the appendix 331 appendix glossary of technical terms 333 index 343

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