What The Greek Debt Crisis Means For These 3 Commodities…

| June 16, 2015 | 0 Comments

what to watchThree Commodity ETFs To Watch As The Greek Debt Crisis Unfolds…

Things are getting rather interesting in the Greece debt crisis…

After years of kicking the proverbial can down the road, Greek politicians appear ready to let their country fall into bankruptcy.

With last weekend’s meeting with Eurozone creditors a complete failure, Greece’s Prime Minister Alexis Tsipras called an emergency meeting yesterday to discuss the country’s options.

From the sounds of it, they don’t have many.

Greek Debt Crisis: Pay Up, Or Get The Hell Out!

If Greece defaults on the their debt, there’s a very real chance they’ll exit the Eurozone.   In such a scenario, it’s quite likely we see an ugly global market downturn.

But the downturn may be especially nasty for commodities.


For starters, the US Dollar will surge on the news.  Investors will flee the Euro, parking cash in the world’s reserve currency until things settle down across the pond.

Since commodities generally trade inversely to the Greenback, odds favor a rather sharp selloff in a handful of important hard assets.

Here are three commodities, and an associated commodity ETF, that will most likely see a sharp reaction to a Greek default.

West Texas Intermediate (WTI) Crude-  WTI is stuck at the $60 a barrel mark as investors try to decipher the most recent supply/demand data.  With the high-demand summer driving season getting into full swing, I’m currently biased towards higher prices.

But if Greece defaults, we could see a rather nasty selloff in WTI…

That’s why I’ll be keeping a close eye on the ProShares UltraShort DJ-UBS Crude Oil $SCO in coming weeks.  This 2X leverage inverse fund will scream higher if the price of oil plummets towards $50.

For more information on $SCO, and other ways to play the oil market through leveraged ETFs, check out this article.

Gold-  The yellow metal hasn’t been acting well lately.  The commodity is stuck in a tight range just south of $1,180 an ounce.  But if Greece defaults, there’s a very good chance of gold plunging below the March 2015 lows at $1,150.

That’s why the DB Gold Double Short $DZZ should be on your ETF watch list.  However, a word of caution- $DZZ is thinly traded.  As a result, only experienced traders should consider speculating in $DZZ.

For other inverse gold ETF alternatives, click here.

Silver-  Gold’s little brother is trading at the bottom of a multi-month range near $16 an ounce right now.  If the US Dollar surges on a Greek default, it’s not out of the realm of possibility to see silver plunge to new multi-year lows below $15.

To capitalize on this scenario, I’ll be watching the ProShares UltraShort Silver $ZSL.  If the inverse 2X leveraged fund breaks above $110, we could see a monstrous move to $120 or higher.

Here’s more information on the best ways to capitalize on silver price swings via commodity ETFs.

Now listen closely…

The debt situation in Greece is fluid.  The country can avoid default if they’re willing to make some serious considerations with their Eurozone creditors.

It goes without saying that any word on the outcome is going to move the markets rapidly.

Here are a few important dates to keep in mind…

Greece meets with the Eurogroup Finance Ministers this Thursday.  If progress isn’t made at that meeting, the European Union Leaders Summit on June 25th may be the country’s last chance at averting catastrophe.

Now, always remember…

Controlling your downside risk is your first priority as a trader.  Use a stop loss order or other risk control measure if you plan on trading the commodity ETFs above.  They move quickly!

Until Next Time,

Justin Bennett

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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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.