Government Shutdown? What Commodities To Watch…

| September 30, 2013 | 0 Comments

oil-gold-palladiumHere we go again…

Washington D.C. politicians are locked in another heated US budget battle.  If they can’t come to an agreement soon, the US Government will suffer its first shutdown in 17 years.

As usual, instead of coming together for the common good of the country, Republicans and Democrats are focused on making each other look incompetent. 

Maybe somebody should inform them that they all look like a bunch of bumbling buffoons!

What does all this political uncertainty mean for the commodity markets?

Here’s a look at which commodities will likely see the most volatility should the lights go out in Washington.


Maybe you remember.  In August 2011, Washington D.C. was engulfed in a very similar situation.   The US Government was close to shutting down as the nation’s debt ceiling was on the verge of being breached. 

The uncertainty helped push gold to all time nominal highs near $1,900 an ounce. 

This time around, politicians have until October 17th to raise the US debt ceiling.  If they can’t come to an agreement by then, the US will default on its financial obligations.  

Such a scenario would immediately engulf the US in a financial crisis that would make the 2008 market crash look like a walk in the park.

Now let me be clear…

It’s highly unlikely this will happen.  But the closer we get to the mid-October debt ceiling deadline without an agreement, the more investors will likely start pushing up the price of gold.


Much like gold, silver will be on investors’ radar screens as the US budget battle progresses.  The last time these same US fiscal issues came to the forefront, silver ran to $42 an ounce.

And that’s not all…

Given the current technical situation, silver has the potential to pop to at least $24 an ounce within the next few weeks.

Let me show you what I mean….


As you can see, the precious metal is hugging the 50-day moving average.  This important technical indicator should provide price support, sending silver higher in coming weeks.


While gold and silver look to trade higher in coming weeks, crude oil will likely do the opposite.

Middle East tensions are cooling, US oil inventories are rising, and the summer driving season is in the rear view mirror.  That means oil prices are already vulnerable to a breakdown. 

But when you add in the current political situation in Washington, it makes a severe fall in oil prices all the more likely. 

The commodity is trading just over $101 a barrel this morning.  However, I wouldn’t be surprised to see crude drop to the mid-$90 range within the next few weeks.

Here’s the bottom line…

We’ll likely see a massive increase in market volatility across the commodity landscape in coming weeks.  But the assets above will likely see the most attention from wary investors.

Stay tuned to Commodity Trading Research for continued coverage of the hard asset markets!

Until Next Time,

Justin Bennett

Tags: , ,

Category: Crude Oil, Gold, Silver

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.