Commodity ETF Alert April 2009 Portfolio Update

| April 28, 2009 | 0 Comments

April 28, 2009

There it was.

I cracked open my most recent issue of the Phoenix Business Journal.  Screaming out at me, “Stimulus May Drive Inflation of Raw Materials”.  The title article leapt off the page.

Well what took them so long?

The talk of government stimulus, infrastructure build-out, and shovel-ready projects has been going on for months now.  What’s widely ignored is the impact on commodity prices.

The Business Journal highlighted costs jumping on concrete, asphalt, and construction sand.  Unfortunately, they missed the bigger issue.  It’s not just these commodities that will see prices march higher… most commodities will move higher.

And that’s inflation in its simplest form.

Government spending and a crush of devalued dollars flooding the market can do only one thing.  Drive inflation up.  When that starts, the one place I want to be is in hard assets.

In my mind, commodities are the best hard asset out there.  So hold tight… the next year or so is going to be interesting.

Let’s take a look at our open positions…

Position Updates

. . . . iPath Dow Jones–AIG Copper ETN (JJC) – Buy up to $35.00

This was our new trade for the month.  We caught a good run for the first week.  JJC topped out over $31.  Then copper hit a downdraft.  We’ve given up our profits and a bit more.  I see this as a short term correction in a longer term uptrend, so hold tight.

. . . . iPath Dow Jones–AIG Grains ETF (JJG) – HOLD

The Grains traded above the $40.50 level several times in the last month.  The commodity is clearly consolidating.  It looks like the 50-day moving average (right around $38) is acting as a level of support.  We’re still in profitable territory on this trade.  However, if we get a big break down, we may exit to conserve capital.

. . . . iPath S&P GSCI Crude Oil Total Return ETN (OIL) – Buy up to $20.25.

For most of April, OIL traded sideways.  It wasn’t till the last week that it broke below the 50-day moving average.  I’m watching this closely… I believe oil prices are heading towards $70 a barrel (and will pull our ETF up with it).  Use this opportunity to establish a position.  Buy up to $20.25.

Action To Take

 •  Nothing new.

Category: Commodity Trading

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.