Commodities Essential - April 26, 2011

Silver: Precious, Industrial and Unrelenting

The gold/silver ratio has halved in less than a year (June 2010 thru April 2011) and follow-through to the 1980 low point would mean the ratio halves again. Is this to be expected?

I’ve worked amongst commodity newsletter writers who loved using the inflation-adjusted highs to pick their extreme targets for gold. It’s quite the attention getter when you can tell someone gold will rise to $2,000 an ounce while it’s currently trading at $700 an ounce. It’s especially a common strategy among the gold dealers looking to hock you gold coins on the radio or internet. In today’s publication you can find the ever-popular inflation-adjusted charts of gold and silver:

 Commodities Essential. 26 April 2011

 Trade Essentials.

 This is a reiteration of BOM (PowerShares DB Base Metals Double Short ETN). We currently maintain the following open order, as recommended last week on 4/19. For those who already placed that order, keep it active. For those who have not, it is still applicable:

 BOM (Last Price: $10.30)

  •  Buy shares of PowerShares DB Base Metals Double Short ETN, symbol BOM, at $10.60, STOP. If and only if this order is filled, then place an order to sell all shares of PowerShares DB Base Metals Double Short ETN, symbol BOM, at $9.80, STOP. Both of these orders are good till cancelled

  •  Note about the stop-in entry: I only recommend entering BOM if it hits $10.60. Currently that is above the market price and is why we are using a STOP order to enter this position. If we are filled on this order then I suggest placing a stop-loss order at $9.80, as usual.