Commodities

Naturally, as an Austrian economist, I am bullish on commodities, especially precious metals. These metals acts as a store of wealth during periods of inflation. The amount of money creation at the Federal Reserve makes inflation inevitable, so a rise in commodity prices was inevitable. The question now is have inflation expectations already been priced into gold and silver? If the answer is yes, when real inflation strikes gold and silver will not move. However, I personally believe that inflation will still be more than is expected by the market. This means that gold and silver still have growth left in them. So, now on to how to trade them.

GLD:



GLD is an ETF that tracks the price of gold. I am holding gold as a long term investment (and making a good return on it!) At this point I see it doing one of two things. If in the next week or two we see a strong movement above $142 ($1450/oz spot gold), we will be looking at a breakout. At that point I would recommend buying. If that doesn't happen, I could see it falling to test support again which would be a good buying opportunity.

SLV:



SLV is an ETF that tracks the price of silver. This one has made such a nice run that it seems like it would have to have a pull back. On the other hand, it moved from $17 to $30 without a correction! The 20 day moving average has been useful for trading silver. I would buy on a break above the 20 day and sell on a fall below it.

April Fools

Here is a list of stocks I am interested in at the moment:

NFLX:



I am very bullish on this stock. Many believe this stock is overhyped and will lose market share once competitors get to the market. However, Netflix has done what all great tech stocks did: Do it first and do it well. Yes anyone else can start a site that does what Netflix does, but Netflix will win for the same reason they won at the DVD rental business. They were there first and they do a good enough job that customer stick with them. Anyone can theoretically replicate Google or Amazon. But the first mover advantage means that they win.

At the moment I would not recommend buying it as I expect another pull back to a least the 50 day moving average. I myself own this one and might look to take some profits if the price rises into the $250-$260 zone, buying again on the pullback. You will notice that the trend for NFLX is to rise quickly above the 50 day moving average and to then fall back to it. Until this trend is broken, I would expect it to continue.

PAY:



My do I wish I had come across this stock earlier. I currently do not own it but I wish I did! This company is the leader in the up and coming idea that you will use your cellphone as a payment device. For me it is too high in the trend to purchase at the moment. However, if it would fall back toward the 50 day moving average I will pick it up. At this point I would probably put a buy order at around $50. This is a risky play as it is very volatile. But until it breaks out of the current trend line I will remain bullish.

CAT:



I almost bought this stock in mid January. What a mistake not to! (I'm not claiming to be perfect!) I'll be keeping an eye on this one to spot an entry point if it comes back down. With inflation on the rise, food prices will be rising. This creates more demand for companies that provide equipment. Another one to watch is DE.

Next time: Commodities!