Trade Ideas?

Just some charts I was looking at tonight; grains, oil, and the metals.

I like this blowoff in beans and retrace to $15, I think the worry about a China slowdown sort of trumped the worries of drought and slim harvests.  I’ll probably dip my toes in long either tonight during globex or this week.

Wheat’s fundamentals might be at work here, waiting to see how much is planted acreage wise and what the fall harvest globally looks like. Here is an article about China’s demand for beans versus other grains.  wheat-market

Long term food, land, and water are going to be hot.  You can’t eat gold and live too long.

Grains are good.

 

Oil is precarious.  The middle east doesn’t want the rest of the world finding alternatives to oil, so I think they will do the utmost to keep the price below $100 a barrel.   Oil has weakened on growing supplies and worries of a global slowdown.  I think its safe to say oil will be stuck in a channel unless there is a war or more instability in the main production areas.  Buying the 80’s and scaling in is probably not a bad plan, I would definitely be a long swing if it dropped into the 70’s.

Disclosure: I’m short SCO using Puts spreads, which is long oil via a decaying turd derivative.

Oil prices are between a rock and a hard place.

 

My favorite trades are the metals, specifically my arch-nemesis the platinum gold spread.

The metals. I forgot copper.

Metals get pumped against fiat currencies on printing, that’s basic inflation.  Gold is a safe house, that is until this bacteria starts making gold out of toxic slime.

http://www.forbes.com/sites/kitconews/2012/10/05/focus-microbial-alchemy-produces-gold-from-toxic-chemical/

Gold is expensive so people buy silver. The central banks of the world ease so people hedge inflation with more gold. Rinse and repeat.  Industrial metals like copper and platinum take a beating on global slowdown worries.  Platinum is 15 times more rare than gold.

Disclosure: I’m long GLD call spreads for nov.

Platinum has been on a rage because of a strike at the world’s top platinum mine.

http://www.guardian.co.uk/world/2012/oct/05/anglo-american-sacks-south-african-miners

I’m watching copper, I managed to pull off a decent long that I took some pain on.  Thanks to @jgwilson929 for giving me the idea to sell some futures options premium.  I like it here if we can get a move over $4, this 3.80-4 level is not really swingable.

 

So whats the play?

I like the /PL-/GC spread on a recovery with little or minimal inflation. If inflation problems persist the spread might not be that great thanks to gold as an inflation hedge.  The ratio is 2 /PL long and 1 /GC short.  You can also use the mini metal contracts.  Watch this chart.  This trade isn’t for the faint of heart, trust me I know.

PL-GC

 

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