Weekly Update: September 4, 2013

| September 4, 2013

Weekly Update:  September 4, 2013


Commodity Watch:

Gold and silver are all over the map in recent trading.  In fact, silver surged 3.5% on Tuesday only to give back all of those gains in today’s trading session.

Why such volatility?

Constant news flow concerning the Syrian situation has precious metals investors on the edge of their seat.  Should President Obama receive the go ahead from Congress, we could see military action by the end of next week. 

If so, you can expect a big dose of volatility for gold and silver.

On the other hand, if nothing happens with Syria, we could see these two metals give back much of their August gains.  With all the headline uncertainty, it’s best to take a wait and see attitude with precious metals.  

As far as corn goes, the commodity is on the verge of giving up all the gains it attained in mid-August.  As of this afternoon’s close, corn is trading at $4.94 a bushel on the September contract- down 5% from the multi-week high set on August 26th.

Remember, corn is a weather driven market right now.  But with intense heat baking the Midwestern US in recent days, there’s a growing chance the USDA’s yield estimate is too high.  That means we may have a trade in the corn market soon.

Let’s get to our open position in oil and natural gas…


Portfolio Recap:

. . . . US Oil Fund (USO) September 2013 $36 Puts

Much like precious metals, oil is an absolute roller coaster ride right now.  As we talked about last week, the Syrian situation has this market held hostage.  Forget fundamentals because they just don’t matter when there’s a threat of Middle East supply disruptions.

This week’s EIA inventory is delayed until tomorrow due to the Labor Day holiday.  Should we see stock builds like last week, it will further support the bearish fundamental call I’ve been making on oil for weeks now.

If you’re still holding the September $36 puts- hang in there.  There’s still a chance the Syrian situation gets brushed under the rug.  If so, oil will be below $100 a barrel in no time.

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

Our natural gas trade is starting off on the right foot thanks to continued warm weather in many parts of the US.  The longer these hot temperatures last into September, the better it is for natural gas bulls.

Obviously, tomorrow’s EIA natural gas inventory report will play a key role for this trade.  Should storage additions come in weaker than expected, we’ll likely see natural gas rise to the $3.75 mmBtu area in short order.

As of this afternoon, we’re sitting on gains of 11% in this trade.  Keep holding the UNG calls for further upside…


Category: Commodity Trading