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.