Weekly Update: September 25, 2013

| September 25, 2013

Weekly Update: September 25, 2013


Commodity Watch:

Today’s EIA oil inventory report revealed US crude supplies are back on the rise… that’s undeniably bearish news for the price of oil.  What’s more, Middle East tensions are cooling down.  Syria has agreed to turn its chemical weapons stockpile over to the UN, and Iran is suddenly turning to a more a cooperative tone.

Be prepared for another oil trade soon…

Corn is still stuck near 52-week lows at $4.50 a bushel.  Mild Midwestern US weather is raising hopes of the US harvest season going off without a hitch.

However, many top commodity analysts are still convinced the USDA yield estimate is too high.  If so, the price of corn will likely rise as we progress into Fall.  I’m still stalking a trade in corn, so be ready at a moment’s notice.

Gold was all over the map last week…

As you know, Fed Chairman Ben Bernanke sent the yellow metal soaring last Wednesday.  But then St. Louis Federal Reserve Bank President James Bullard crashed the party on Friday.  In an incredibly irresponsible Bloomberg interview, Mr. Bullard contradicted what Bernanke said less the 48 hours earlier.

We’ll have to stick to the sidelines in gold until this choppy trading action subsides.

Let’s get to our open trades in natural gas and silver…

Portfolio Recap:

. . . . US Natural Gas Fund (UNG) October 2013 $19 Calls

Last Thursday’s EIA natural gas inventory report came in below analysts’ estimates, which is bullish for prices.  However, mild US weather forecasts are turning the commodity quickly lower in recent trading.

Now listen closely…

With September drawing to a close, we’re entering the expiration month for our $19 UNG calls.  As a result, we need to see an immediate rebound in natural gas.  Otherwise, these call options will lose value very quickly.

With that in mind, if you’re a conservative investor, I recommend you close this trade tomorrow morning.

If you’re willing to accept more risk, hold these $19 call options into expiration.

 

. . . . iShares Silver Trust (SLV) October 2013 $22 Calls

Wouldn’t you know it…

Less then 48 hours after Ben Bernanke sent the silver market surging, St. Louis Federal Reserve President James Bullard brought it crashing back.

I can’t begin to explain how furious I am at Bullard’s careless and inconsistent statements.  In my opinion, the Federal Reserve is losing credibility with investors very quickly.

Our SLV $22 calls, which shot to a gain of 120% last Wednesday, are now flirting with losses.

However, I’m not ready to close this trade just yet.  If you can withstand the volatility, I recommend holding these calls until further notice.

 

Category: Commodity Trading