All commodities have experienced a large, much-needed correction. Oil, energy, metals, food; all the basic materials. The dollar has made a large move up. However, I’m not certain that we are at the beginning of a strengthening dollar just yet. I still believe America has a large inflation problem. Though there seems to be more evidence of global growth slowing down, which would bring down the price of commodities and materials down even more, I think now is a good time to take advantage of the dollar and commodities correction.
Here’s a chart of the Euro versus the US dollar:
There may or may not be further downside for the Euro. I’m guessing the dollar will weaken again over the next six months.
Here’s a chart of the gold ETF:
Gold usually increases along with inflation and oil. If we’ve got an rising inflation and oil, gold will go up.
Here’s a chart of the price of platinum:
I particularly like the prospects for platinum. I recently purchased some Jan. 2010 calls on Stillwater Mining (SWC), the only US producer of platinum and palladium. With many good reasons to expect a continuation of a commodities bull market, and this recent large correction, I felt the time was right to make such a purchase.
If you’re a trader, Gold Stock Bull lists three areas where one should probably be able to profit: financials, the dollar, and energy. With energy, Petrobras is the particular stock mentioned right now that seems to be a both a good trading and investing opportunity.
I also agree with the general outlook on energy. Oil was greatly overvalued, but now it seems that there has been an over-correction. But perhaps not, as I have been hearing that there is some evidence of a greater worldwide economic slowdown, and thus a decrease in demand for energy.
Newmont Mining Corporation announced today the elimination of its entire 1.85 million ounce gold hedge position. It’s now the world’s largest unhedged gold producer. In addition to the falling U.S. dollar, rising cost of oil, and over-the-counter derivatives and sub-prime fiascos, the stage seems to be set for the price of gold to sky rocket.
But today, the price of gold fell from about $656 to $646. I had foreseen that gold might fall one last time, so I had already placed trades to sell my calls at market open this morning. I made a nice profit and will now be looking to accumulate more probably next Monday or Tuesday.
Though he writes about one gold mining stock in particular, OTC Speculator puts forward excellent reasons to load up on gold stocks in general right now. His bullish case for gold is “rather simple”: Continue reading ‘Gold on the Rise Again’
