Will Dollar Slide Continue to Fuel Commodities?
(Video Transcript)May 5, 2018 Update James Cordier
Good afternoon. This is James Cordier of OptionSellers.com with a market update for May 5th. Well, we are starting to receive some very interesting economic data just recently. Not so much here in the United States, but definitely in the EU. Both German and Great Britain numbers recently are really showing some signs of slowing. It’s very interesting that with quantitative easing still in place throughout the European Union we have slowing already in some of the main economies, namely Germany.
Here in the United States we still do have a fairly robust recovery developing. While there are some economic numbers here showing that it’s not taking off to a great extent, it’s still on firm footing. This has created a much stronger U.S. Dollar just recently. Which has brought a lot of commodity prices back into check. Earlier this year, we were having fears of the U.S. Dollar falling in value and investors rushing into precious metals, gold, silver, platinum, and the like, and as the U.S. Dollar now becomes “King Dollar” once again gold prices and silver prices have backed off markedly. What’s so interesting is if quantitative easing is still in place throughout the European Union, how is that area slowing already? That certainly is a big point for us looking forward to help decide economic growth. Globally, in China of course we have tariff talk, not that tariffs are going to necessarily take place to a great extent but, what that often does is it creates anxiety amongst major players and I think that’s what’s going on in Europe right now.
We do see decent demand for commodities going forward. The energy patch continues to be relatively strong but we do see that plateauing as well later in the summer. June, July, and August is often the high for demand in energy across the United States and we see that possibly slowing this big rally that we’ve seen in crude oil recently. We love the idea of putting a very large strangle around crude oil prices. We have a nearly fifty dollar strangle around that market. We think that’s going to be an excellent opportunity going forward and we have sales in precious metals some fifty, sixty, and seventy percent above current prices. With a strong dollar, we think that’s going to be an excellent way to go into the last half of 2018. We will just have to wait and see. We really like the way portfolios are positioned right now. We did a lot of rebalancing over the first quarter and a half and we think that we’re going to be bearing fruit here going forward over the next six months.
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