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These Big Gold and Energy Trades Are Still Working

By Brian Hunt, Editor in Chief, Stansberry Research
Wednesday, June 30, 2010

We have three charts today that show you just about everything you need to know to trade commodities successfully right now...
Our first chart is a trend we've been writing about for a long time... the uptrend in gold stocks, as represented by the big gold stock fund GDX. As you'll see, it's enjoying a series "higher highs and higher lows."
Driving this trend is a familiar story: In order buy maximum votes, governments around the world have taken on incredible financial obligations they can't hope to repay. This harms the value of their paper currencies... and drives the price of "real money," gold, higher and higher. The fundamentals are solid here, and the trend is UP...
The next chart is a trend few investment firms are covering right now... the terrific uptrend in U.S. natural gas royalty trusts. As Matt Badiali explained months ago, natural gas has taken a massive hit over the past few years. It was sold off so heavily in 2008 and 2009 that this year's market weakness couldn't push it down any farther.
Considering natty is down so much, and investors have lost so much money, we consider it the "contrarian's commodity." Natural gas royalty trusts give you a high-income way to play this "gas is done falling" idea.
Like gold stocks, the uptrend in royalty trusts is plenty healthy, despite the horrid market. One of our favorite companies in this space, San Juan Basin (SJT) is enjoying a bullish series of higher highs and higher lows.
Our final trend to highlight is another shameless plug for the research you read every day in Growth Stock Wire. It's an update on the trend I highlighted back in May... the end of the huge rally in economically sensitive mining companies. I urged you to avoid companies that produce copper and iron ore... Their charts showed massive selling pressure at the end of long uptrends.
One poster child of this downtrend is the world's largest iron ore miner, giant Brazilian miner Vale (VALE). Like almost every copper or iron ore miner, the stock is locked in a series of "lower highs and lower lows." It was hammered yesterday for a 6% loss and is closing in on its lowest low in 10 months. If the global economic recovery fails to live up to its hype, that means lower iron ore prices... and a real clobbering for Vale.
Two months ago, we expected to see gold and natural gas doing well... and Vale's breed of stocks not doing well. Our charts today show we were right. We expect these trends to continue... which means avoid base-metal miners, stay long natural gas trusts, and stay long gold stocks.
Good trading,
Brian Hunt

In The Daily Crux Recent Articles
Market Notes
National Bank of Greece slides to another new 52-week low.
Another bearish economic sign... Japanese auto giant Toyota hits new low.
Earnings today... Monsanto (seeds and Roundup), Apollo Group (for-profit education), Smith & Wesson (guns).
Market Watch
Symbol Price
S&P 500 1030.71 -1.0% +12.1%
Oil 33.96 -0.6% -10.5%
Gold 121.68 +0.3% +33.5%
Silver 18.21 +0.4% +36.1%
US-Dollar 86.03 -0.2% +7.3%
Euro 1.22 +0.4% -12.8%
Volatility 34.54 +1.2% +31.1%
Gold Stocks 475.22 +0.1% +39.9%
10-Year Yield 2.95 -0.7% -16.2%

World ETFs
Symbol Price
USA 103.22 -1.0% +12.3%
Canada 24.87 -0.6% +16.1%
Russia 16.54 -2.4% -0.1%
India 30.25 +0.7% -2.8%
Israel 13.46 +0.2% +18.3%
Japan 9.20 +0.0% -2.4%
Singapore 11.24 +0.4% +24.6%
Taiwan 11.20 -0.9% +11.0%
S. Korea 44.71 -0.8% +28.5%
S. Africa 52.65 -2.6% +11.4%
China 39.13 -0.5% +2.0%
Lat.America 41.42 -0.9% +19.2%

Sector ETFs
Symbol Price
Oil Service 94.64 +0.5% -3.1%
Big Pharma 59.58 -0.3% -0.6%
Internet 48.97 -0.4% +14.4%
Semis 12.20 -1.5% +11.9%
Utilities 28.26 -0.6% +1.3%
Defense 16.15 -0.5% +15.8%
Nanotech 8.39 -0.7% -2.9%
Alt. Energy 8.26 -0.6% -18.1%
Water 15.06 -1.0% +2.3%
Insurance 14.15 -0.9% +21.8%
Biotech 17.26 -1.0% +23.4%
Retail 15.51 -1.3% +12.2%
Software 20.05 -1.6% +20.4%
Big Tech 42.71 -1.5% +17.4%
Construction 11.11 -0.9% +1.7%
Media 11.27 -2.3% +29.7%
Consumer Svcs 53.63 -1.4% +21.0%
Financials 49.54 -1.1% +16.2%
Health Care 58.23 -0.8% +7.6%
Industrials 51.34 -0.7% +23.1%
Basic Mat 53.54 -1.4% +23.3%
Real Estate 47.21 -1.0% +45.6%
Transportation 72.36 -0.7% +24.3%
Telecom 18.66 -1.2% +4.9%