Weekly Update: November 20, 2013

| November 20, 2013

Weekly Update:  November 20, 2013

 

Commodity Watch:

The Federal Reserve released the minutes from their most recent Open Market Committee meeting this afternoon.  In the highly anticipated report, Fed Chairman Ben Bernanke revealed that he’d start tapering “… in coming months”.

I don’t know about you, but that’s about as wishy-washy a statement as I’ve ever heard…

As you know, the Fed has been talking about tapering bond purchases for most of 2013.  As a result, investors have fled the inflation protection of gold and silver for the perceived higher rewards of equities.

And the same thing is happening this afternoon…

Gold and silver are experiencing heavy selling as Ben Bernanke once again purports the Fed is ready to taper.

But here’s the deal…

I highly doubt the Fed will start paring back bond purchases right before the holiday shopping season.  US consumer confidence is highly important this time of year.  That means Bernanke will likely avoid doing anything that would possibly disrupt the economy during this essential two-month window!

 

Portfolio Recap:

. . . . US Oil Fund (USO) December $36.50 Puts

As you know, I sent out a Sell Alert for our USO put trade yesterday.  You should have been able to sell these put options for at least $2.80 per contract.  That equates to a realized gain of just over 100% for these puts. 

Congratulations on a great trade!

Stay tuned, I have another trading coming in the crude market soon…

. . . . US Natural Gas Fund (UNG) January 2014 $19 Calls

Natural gas prices are rising as Old Man Winter pokes his head in the front door.  In fact, the commodity rose 12 cents to $3.67 in today’s trading session.

For a large portion of the US, the weather is forecasted to get downright chilly over the next few weeks.  In fact, the NOAA’s 6-10 day weather outlook says temperatures will be well below normal through the end of November.

And that’s not all…

Tomorrow’s EIA natural gas inventory report will likely show the first storage withdrawal of the season.  In fact, analysts are predicting a loss of 15 bcf for the week of November 15th.  Should the official number come in lower than that, we could see gas break above the $3.80 mmBtu mark.

Remember, this UNG call trade is based on rising natural gas prices into the heart of the winter heating season.  Keep holding these calls for higher prices!

 

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.