Commodity ETF Alert December 2009 Portfolio Update
December 22, 2009
Goodbye 2009… Hello 2010!
This is the last update for 2009. I hope everyone is having a safe and happy holiday season. It’s been quite a year for the service… a few things have gone really right… like our recommendations on Oil, Gold, and even Copper.
You no doubt put some nice cash in your pockets from these trades…
And a few recommendations didn’t do so well… like our Hog trade. Luckily we were out before too much damage was done.
Instead of spending a lot of time looking back on 2009, let’s take a moment to look forward to 2010.
2010 is going to be an interesting mix of economic events… I believe all will be positive for the commodity markets.
I’m seeing two big drivers right now, Inflation and Emerging Market Growth. I’m sure others drivers will appear as the New Year gets rolling. However, let’s focus on these two for right now…
Just look at inflation.
We’re on the verge of an explosion in the costs of goods… central banks around the world have flooded the markets with cheap and easy money. Once economic growth takes hold, we’ll see inflation start to eat away at the economy.
You’ve heard me talk about this before… and I see it as a continuing trend. And that means hard assets are the place to be. Commodity prices are sure to jump higher as inflation takes hold.
But that’s not all…
The other major factor influencing commodity prices in 2010 is emerging markets growth.
Russia, Brazil, India, and China are all looking at improved growth in 2010. These big four, and dozens of other smaller countries, will once again resume a high economic growth rates.
As a result, these countries will see their middle class grow dramatically. As the middle class grows, they’ll have more money for disposable goods and services. They’ll once again be buying homes, cars, and furniture… and these products are all made from commodities.
As the middle class grows, demand for commodities will move higher… and that means higher commodity prices.
These are just two of the key areas I’m watching for growth in the New Year. Like I said, many others are sure to crop up… Hold on tight… 2010 is going to be an exciting one in the commodity markets!
Now, let’s take a look at our open positions…
Position Updates
. . . . iPath S&P GSCI Crude Oil Total Return ETN (OIL) – Buy up to $25.50
Our recent trade in Oil hasn’t moved much since our recommendation. The recent rally in the US Dollar has put downward pressure on the major commodities including Oil. Just today, OPEC announced they’d be holding production stable… a good sign that demand is stable as well. If you don’t have a position yet, consider buying under $25.50 a share.
. . . . iPath Dow Jones-UBS Aluminum ETN (JJU) – HOLD
Despite the US Dollar rally, Aluminum prices keep marching higher. Activity in the Aluminum industry is picking up. Rusal, the giant Russian Aluminum producer, is looking to an IPO in Hong Kong. And India’s NALCO is working on acquiring a major supplier of coal… all this activity tells me the market is heating up.
We’re well above our buy-up-to price… hold tight for now.
. . . . iShares Silver Trust (SLV) – Buy up to $17.00
Strength of the US Dollar is contributing to commodity weakness and Silver hasn’t been able to sidestep the fall. We’re now below our buy-up-to price. If you don’t have a position, consider buying on the dips below the $17 level.
. . . . iPath DJ AIG Natural Gas TR Sub-Index ETN (GAZ) – Buy up to $15.50
The cold winter weather has arrived… and Natural Gas prices are moving higher. The news of Exxon buying XTO (a major Natural gas player) didn’t hurt either. Savvy investors saw the deal as a green light for higher prices ahead. We’re still under our buy-up-to price… pick-up GAZ below $15.50.
. . . . iShares COMEX Gold Trust (IAU) – HOLD
Gold slumped in the last few weeks as the US Dollar rally weighed on prices. Just give this time… the threat of inflation will drive this commodity higher. Hold tight for now.
. . . . iPath Dow Jones–AIG Copper ETN (JJC) – HOLD
We’re hovering right around the target price on this commodity. Watch it closely for an exit point… remember, the exit is $45.50.
Action To Take
- Move Silver (SLV) from a Hold to a Buy. Buy on dips below $17.00.
Category: Commodity Trading
