It seems that the collapse of the euro, and possibly a global financial market correction, has become more likely than not in the next few year. It started with the fiscal disaster otherwise known as Greece, which has public debt equal to 166% of total GDP. But as time went on, Spain, Italy, Portugal, and Ireland all joined the race, with the latter four nations all faced with debts totaling to more than 100% of GDP (and let’s not even think about France’s 87% ratio of the same caliber) [see also Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk].
“It’s coming again” warned commodity legend Jim Rogers earlier this week. When asked about the future of the U.S. economy Rogers had a pessimistic outlook, as he feels that the global financial landscape is simply too volatile to avoid another recession. And what’s more, Rogers thinks this next one will be worse than 2008. He cites the recessions in 2002 and 2008, stating that the 2008 recession was so much worse because of higher debts. Now, in 2012, debts are even higher, leading Rogers to believe that the coming recession will be even worse [for more commodity news and analysis subscribe to our free newsletter].
Facebook Inc. (FB) rose 13% for its debut at $42.99, after a half-hour delay that mesmerized traders everywhere and slowed down the loading times of major financial portal Web sites. Shares had been priced at $38 on Thursday May 17, and were supposed to debut at 11 a.m. Eastern Friday, but were delayed for a short time on the Nasdaq exchange. All of this buzz is certainly exciting, and it’s quite easy to get wrapped up in the hype. Remembering the Google IPO, you ask yourself: is it time to scoop up a few FB shares, with the aim of making a quick buck?
Markets are nearing a critical moment in the year as earnings season draws to a close. After a strong first quarter, a number of blue chip firms are reporting strong earnings, keeping optimism levels high for the time being. But with euro debt problems arising in countries like Ireland, Spain, and Portugal, it seems like 2012 may repeat last year’s performance. After a strong beginning of the year, stocks were battered as the Greek debt crisis and a downgrade of U.S. debts wreaked havoc on trading. Those who were unfortunate enough to have equity-heavy portfolios were invariably slaughtered to close out the year, leaving frustration where there had been strong gains [see also Three Reasons Why Gold Is Overvalued].
Energy: I do not like the action in Crude so I advised clients to cut their shorts in half. Do not misinterpret me; I am not getting long but rather lightening up on short trades. Though I do not agree with the acceleration of commodities that we are seeing, I refuse to fight it. Hedgers should also start to wade into longs in heating oil and RBOB to protect from upside spikes. My suggestion is a long future against a sale of out of the money calls 1:1. High to low natural gas moved 30 cents. Tighten up stops just below the 18 day MA which should ensure at least a small profit unless we gap down tomorrow. My take is if we break that level we may get a chance to get one more buy below the $2 level…stay tuned.
For the past few years, the investing world has turned gold into its darling commodity, as its meteoric rise was well-documented and thrust into the forefront of major media and news sites. All the while, its sister metal silver received very little attention by comparison. Now, many see gold as a great portfolio diversifying agent, a sound inflation hedge, as well as a great place to grow initial capital. While gold may be poised for a bright future, silver may present an even greater opportunity that investors would do well not to ignore [see also 25 Ways To Invest In Silver].
The SPDR Gold Trust (GLD) is one of the most popular exchange traded products in the world, as it is home over $68 billion in assets and an average trading volume topping 16 million shares. This fund features a physically backed exposure to gold while charging fees of just 0.40%. The yellow commodity has been surging in popularity in recent years as the precious metal soared past $1,900/oz. while analysts and investors speculated about where the asset was headed. For many investors, GLD is their go-to investment vehicle for gold exposure and trading, as futures contracts can often be complex and dangerous [see also Why No Investor Should Own GLD].
Contango is simply an unavoidable phenomenon of the commodity market; at some point almost all commodities will fall into this pattern. For those unfamiliar with the term, contango simply refers to a scenario in which near month futures are cheaper than those expiring further into the future, creating an upward sloping curve for future prices over time. Traders and investors need to keep a close eye on futures curves, as they can have a drastic impact on positions while also presenting opportunities for lucrative trades. Now that the ETF industry has cracked commodity investing wide open, monitoring contango has become more important than ever [see also Understanding Contango Through Natural Gas Futures].
As 2012 wears on, investors seem less and less sure how the year will end. Some feel that the early bull market we experienced is here to stay and that strong U.S. data only supports that claim. But others feel that such rapid appreciations in stock markets mean that we are about due for a pullback, potentially ending the year on a sour note. No matter which way you feel about the economy, there are always strategies to make a trading profit, and for the time being it looks like precious metals are it. These four metals have been steadily outperforming their commodity peers in recent trading sessions and are presenting a strong play [see also Three Reasons Why Gold Is Overvalued].
Those looking for a reason to add commodity exposure to their portfolio will find gold’s massive historical return to be heavily persuasive. This precious metal has quickly become one of the few safe haven investments left on the market as investors will typically flock to gold when equities falter. Some swear by futures contracts, while others are more partial to obtaining their gold positions by investing in the mining sector, which can offer offer lucrative opportunities as these securities often have high betas. Still, others have embraced exchange traded products as their primary means of establishing a position in this commodity [for more gold news and analysis subscribe to our free newsletter].