Now that most of the world has bought copper, intent to make the big bucks, it’s falling, as are most commodities.
Quite simply, China has led this entire commodity bent drive as during recession they have used available cash to buy up rights to commodities through Australia, Africa and every third world country they could find.
Commodities and the USD$ trade in opposite directions, and our dollar has done a great job falling, as commodities have advanced.
We at www.bluechipoptions.com do NOT believe we are in an inflationary cycle in any way, but rather a deflationary climate. Just as in the 1930’s stocks and commodities are closely linked, and it’s also why stock and U.S. Treasury prices have been trending in opposite directions.
What this means to us:
*China’s rally has gone on too far, as have commodities. It also has been too much, too fast, and we believe is over extended also and when it falls (track FXI-China Ishares) it will help lead the global economy in falling, and commodities to fall further.
Oil has also doubled for us from $35 to $70.00 a barrel since the start of the year.
At www.bluechipoptions.com we have owned DXO, and double long on oil, and returned up to 50%.
Take a look at a Pnf chart on light crude oil and note the struggle to pass 73.00.
Typically when a stock or commodity repeatedly tries to break a resistance line and can’t pass it, the stock begins to break down.
And, this leaves us with Gold. Gold appears in a pnf chart to be trading to a “triangle”. Floyd at Blue Chip sees a triangle as “converging trendlines”, where anything could go. In the past Gold hits 971.00 area as upper resistance and breaks down. One trader alone owns 38% of the overall GLD sector fund, so imagine how many bets are being made that Gold can cross 971.00, and finally cross 1000.00.
As a hedge, Gold thrives in either inflation or deflation.
