Commodities Essential - January 12, 2012

Alert: two new trading ideas. 


Let’s add DZZ and CORN …


 


I’ve noted gold’s correlation with risk appetite over the last few months, but I think it might be time it shakes lose from other risk assets. I think gold can fall here even if other commodities and stocks move higher. Why? Chinese inflation. I’ve noted the correlation between gold and Chinese inflation; and I think recent data suggests Chinese inflation has further to fall, thereby undermining the gold’s investment appeal to Chinese citizens. A position in DZZ will allow us to play for lower gold prices.


 


Today the USDA released their January agricultural report on production numbers and supply/demand expectations. It was taken to be very bearish; corn prices went lock limit down. I took a look at the report and it seems the reaction may have been overdone … especially since it is relatively old news (prices were pressed lower in the 4th quarter due to expectations of lower demand for agricultural commodities.) I think this presents us with an opportunity to play for rising corn prices and at a very attractive level. (Additionally, the risk appetite mood may be shifting to a  more bullish bias … which would harbor improved growth expectations and be supportive of corn prices.) A position in CORN will allow us to play for rising corn prices.


 


Let’s add DZZ (Deutsche Bank AG DB Gold Double Short)  and CORN (Teucrium Corn Fund) at the market. 


 


 


******


 


Trade Essentials.


 


 


DZZ (Last Price: $4.87)


 


Buy shares of Deutsche Bank AG DB Gold Double Short ETN, symbol DZZ, at the market. Then place an order to SELL ALL your shares of Deutsche Bank AG DB Gold Double Short ETN, symbol DZZ, at $4.59, STOP. This order is good till cancelled. 


 


[Please note this is a 2x-leveraged inverse fund which means it will move roughly twice as fast as the underlying price of Deutsche Bank gold index.] 



CORN (Last Price: $39.62)


 


Buy shares of Teucrium corn fund, symbol CORN, at the market. Then place an order to SELL ALL your shares of Teucrium corn fund, symbol CORN, at $36.90, STOP. This order is good till cancelled. 


 


[Please note this is a 2x-leveraged fund which means it will move roughly twice as fast as the underlying price of the Deutsche Bank agriculture index.]