Commodity ETF Alert August 2013 Portfolio Update

| August 27, 2013

 

Syrian Troubles Sending Oil Higher…

The oil market is roaring today thanks to bad news from the Middle East.

In case you’re unaware, Secretary of State John Kerry gave a press conference yesterday announcing the US has proof of Syrian President Bashar Al-Assad using chemical weapons on innocent civilians.

It goes without saying that this is an atrocity by any moral human being’s standards…

Furthermore, to let Assad get away with this treacherous act is completely unacceptable.

Thankfully, the US and our allies are preparing plans to hit Syrian targets in retaliation. Honestly, I hope they wipe Assad and his despicable regime off the face of the earth in coming weeks.

However, this sudden increase in Middle East uncertainty is adding an even bigger fear premium into global oil prices. As I write, West Texas Intermediate (WTI) is up $3, trading just shy of $109 a barrel.

Obviously, this isn’t what we want to see with our position in the US Short Oil Fund (DNO).

But as far as commodity investing goes, there’s actually some hidden good news in this horrible situation…

The higher oil goes, the better the profit opportunity in betting on its eventual downfall.

As you know from our trade alert two weeks ago, US supply/demand fundamentals do not support WTI at $109 a barrel. In fact, they don’t support crude at $100 a barrel.

So the best action to take with DNO right now is to keep it at a buy.

If you feel comfortable adding to your initial position, do so. If you don’t yet have a position in DNO, go ahead and open a position now. Remember, DNO is an inverse ETF. So when oil prices fall, DNO will rise.

Folks, history is going to repeat itself in the oil market…

We may see a few more months of uncertainty in the Middle East, and possibly even higher oil prices. But once the fear premium comes out of the oil market, we’ll see a swift and severe sell-off for WTI crude… just like we saw in early 2011.

Be patient with DNO, this ETF has remarkable upside from current prices!

Here’s an update of the rest of our open portfolio positions…
Position Updates Position Updates

. . . . ETFS Physical Palladium Shares (PALL) – HOLD

Palladium is holding up very well even though it’s trading at important technical resistance.

Let me show you what I mean…

Palladium

As you can see, the red resistance line in the chart above has caused problems for palladium in 2013. I’m sure you remember, in June palladium went from $760 an ounce to $640 in a matter of weeks.

But remember, the entire precious metals complex was collapsing when palladium made that absurd move lower. Gold and silver were seeing a mass exodus as investors fretted over the potential end of QE3.

Things are entirely different now…

With gold and silver putting in a hefty rally in recent weeks, palladium is much more likely to hold its ground. What’s more, South African labor issues are coming to a boil (more on that in a minute).

That means we have two catalysts that can potentially push palladium over $760 in the near future.

Folks, everything is starting to come together for this metal. Let’s give our PALL position more time to achieve higher prices…

. . . . US 12 Month Natural Gas (UNL) – BUY

Natural gas has firmed up nicely in recent trading. Even though recent EIA inventory reports haven’t been overwhelmingly bullish, a heat wave entering the Midwestern US this week is keeping a bid under prices.

And that’s not all…

The 2013 Farmers Almanac came out a few days ago. According to this trusted weather source, the upcoming winter will be bitterly cold here in the US.

In fact, two-thirds of the country is predicted to suffer “bitterly cold” winter conditions. Heavy snowfall is expected in the Midwest, Great Lakes, and Northeastern US.

As you may know, such a scenario would provide a very good fundamental backdrop for natural gas prices. If heaters are cranked up in important heating regions, natural gas usage will soar, driving prices higher.

Folks, we’re entering a prime seasonal period for natural gas to start working to higher prices. As a result, let’s put our UNL position back to a buy. It may be a bit of a bumpy ride, but I’m expecting natural gas to jump into the mid-$4 range by early 2014.

. . . . iPath DJ-UBS Platinum (PGM) – HOLD

Interesting news from South Africa…

The largest platinum miner in the world, Anglo American Platinum, just announced 7,000 job cuts in South Africa to reduce costs. The move came as a shock to labor unions, and miners are on the verge of striking because of it.

This news is undoubtedly helping platinum prices move higher in recent trading.
In fact, the metal broke above important technical resistance at $1,540 yesterday.

We’re currently sitting on a slight gain of 3% in PGM. Let’s keep holding for additional upside in coming weeks!

. . . . iPath DJ-UBS Copper (JJC) – HOLD

As you know, rapidly improving Chinese economic data sent copper roaring higher in early August. And at today’s closing price of $3.32 a pound, the metal is holding those gains very nicely.

Of course, what we really want to know is…

“Will copper continue higher?”

Without a doubt, China holds the answer to that question. Important economic data will slowly leak out from the country over the next few weeks. The results of these releases will likely determine copper’s trend into the end of the year.

Should we see another strong number from China’s merchandise trade balance (released on September 8th), we may see copper jump to the $3.50 range or higher.

That would be an ideal situation for our position in JJC as we’re already sitting on gains of 8%.

Let’s stick with copper a bit longer. China’s sudden resurgence will likely continue into September. Keep holding JJC for further gains!

Until Next Time,

Justin Bennett

***Editor’s Note*** Remember, we’re changing the way we do things here at the Commodity ETF Alert starting in September. In the past, we’ve stuck to a dedicated publication schedule thinking it was easier for our subscribers to follow.

But in order to make this service better for our valuable subscribers, we’re switching each month’s trade alert to a floating schedule.

In other words, at any time within the first two weeks of every month you’ll be receiving your trade alert. Having flexibility to release this valuable information will lead to better entry points, which in turn will lead to higher profits.

Since these trade alerts will be extremely timely, they’ll contain only the information you need to initiate the trade, along with a few other details.

Our monthly update, on the other hand, will not change schedule. You’ll receive it on the fourth Tuesday of every month, just like you have been for years. Here’s where you’ll receive the latest information on all the commodity complexes, updates on our open portfolio positions, as well as more detail on the most recent trade alert.

Remember, we’re making these changes because we want to give as much value to you as possible. And when it comes to commodity investing, higher profits are the best way to achieve that goal!

So be ready for some fun as September rolls around!

 

Category: Commodity Trading

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