Commodity ETF Alert July 2011 Portfolio Update

| July 26, 2011 | 0 Comments

July 26, 2011

Copper’s bull run is still intact…

After languishing earlier in the year, copper is on the move once again.  In fact, within the past month, the red metal has risen over 8%.

What’s behind this move?


Recent economic reports reveal their economy is advancing at an incredible 9.5% clip. While that’s down a bit from last quarter’s reading of 9.7%, it’s still a very strong rate of growth.

But it’s not enough to quiet the China bears…

Naysayers claim China’s about to experience a “hard landing”.

What’s a hard landing?

Central banks try to control inflation by raising interest rates.  But if they raise rates too quickly, it can tip an economy over the edge.  An economy has a hard landing if it falls into recession due to interest rate hikes.

On the other hand, a “soft landing” is when an economy slows its growth, but doesn’t fall into recession.  It’s quite a balancing act, but inflation can be controlled while allowing an economy to continue growing.

Now, it’s no secret China’s government is taking steps to rein in inflation.  And that will eventually have some effect on growth.  But so far, the data shows China is nowhere near the dramatic slowdown bears are warning about.

What can China look forward to?

I think China will continue growing at a rapid pace.  And that means they’re going to need more copper.  With global supplies already tight, if China enters the international market to secure more copper supplies, prices are certain to rise.

Of course, that scenario will bode well for our position in JJC.  Let’s keep holding this position for higher prices.

Position Updates

. . . . iShares Gold Trust (IAU) – HOLD

Remember when gold was trading at $1,500 an ounce last month?  Gold bears said it was the end of the road for the yellow metal.

Well, lo and behold, the gold bears are wrong once again…

Gold is breaking above $1,600 in recent trading.  Global debt fears, along with rampant Asian and Indian demand, have the precious metal gaining steam.  And there are no signs of it stopping any time soon.

We’re currently up 19% in our gold position.  But I expect much more out of this position in coming months.  Let’s keep holding IAU for higher prices.

. . . . United States 12 Month Natural Gas (UNL) – Buy Up To $32.50

A record US heat wave pushed natural gas prices higher last week.  Gas burning power plants ran at full capacity to meet consumers’ needs.

But a week of hot weather isn’t enough to give the natural gas market the long-term boost it needs.  Gas prices are now easing to trade at $4.00 mmBtu yet again.

Now remember, don’t panic if natural gas falls below $4.00…

If it does, it will present a great long-term buying opportunity.  If you don’t already have UNL in your portfolio, use the current weakness to grab shares at a good price.

. . . . iPath Dow Jones-UBS Energy ETN (JJE) – SELL

Oil is once again trading near the $100 a barrel mark.  And that has our JJE position back in the black.

But we’re closing this trade…

Since natural gas is a substantial part of JJE (31%), it’s keeping a lid on the performance of this investment.  By closing JJE, it will allow us to get into an ETF with pure exposure to oil and its potential upside.

Go ahead and exit JJE.  But be on the lookout for a pure oil play in a coming issue.

. . . . iPath DJ-UBS Platinum ETN (PGM) – SELL

Weakness in the US Dollar has platinum on the upswing again.  In fact, the precious/industrial metal rose 6% in recent weeks.

And that has us sitting on a 14% gain in our PGM position…

However, let’s use the recent strength as an opportunity to exit this trade.  We have plenty of exposure to precious/industrial metals with our positions in IAU, SLV, and PALL.

We’ll be revisiting platinum in a future issue, but for now, go ahead and collect your gains. Congratulations on a solid trade!

. . . . iShares Silver Trust (SLV) – HOLD

Silver’s on the move…

In fact, the shiny metal is up 11% since our recommendation two weeks ago.  Visit the recent trade alert for all the bullish details on silver.

Keep holding SLV for higher prices.

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

I think it’s about to get wild in palladium…


There’s a growing supply deficit of the industrial metal.  Demand from various industries is eating up supplies.  Things like catalytic converters and electronics.

And that means higher palladium prices ahead…

In fact, the fundamentals are so strong I’m raising our price target in PALL from $85 to $95.  We’re currently sitting on a 10% gain in PALL with room for much more upside.

. . . . iPath Dow Jones-UBS Sugar (SGG) – CLOSED

Remember, we closed our sugar trade for 23% gains in our last trade alert.  If you haven’t already, make sure you take profits on SGG.

Once again, congratulations on a great trade!

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.