Tag Archives: metals

Copper Concurs, Risk Off

We’ve been discussing the turmoil in the financial markets for the last three weeks both literally and figuratively. We’ve discussed the massive flow of money headed into the short-term rates in, “Expected Turbulence in the Financial Markets.” We noted the rotation from industrial to precious metals in, “Re-shuffling the Metals Markets.” We’ve caught both sides of the equity market volatility between, “Equity Rally Waves a Caution Flag” and “Hidden Strength in the S&P 500.” The final piece of the confusion was addressed timely enough in, “Bottoming Action in the Euro Currency” which we wrote the night before the Dollar turned. The point of all this review is that today’s action in the copper market further reinforces the increasingly negative attitude that the commercial traders are taking towards global output. Taken in total, the signs are negative. Taken individually, they are good trading opportunities.

Continue reading Copper Concurs, Risk Off

China Bolsters Copper Market

The United States is crawling into 2014 with the Federal Reserve Board doing everything it can to stave off deflation. Years of zero percent interest rate policies along with the current $85 billion per month in stimulus have failed to generate inflation in anything but the stock market. This leaves GDP well below 2% and unemployment remains stubbornly high. Meanwhile, the European Central Bank just cut their rates in half, now at a .25%, to spur any kind of economic growth of their own. Typically, two thirds of the world, North America and Europe mired in economic doldrums would lead to a generally soft commodity outlook. However, China’s growth continues to be the real story and this is best explained by the inner workings of the copper market.

China’s growth rate continues to exceed 7.5% and is expected to register a third consecutive quarter of growth, which may top 8% for Q4. The vast majority of this growth is in building. Industrial infrastructure and residential construction continue to boom. China’s arcane domestic investment laws are partly to blame for this as their residents have very few open channels of investment other than real estate. Further muddying the waters is their version of the loan qualification process, which now accepts hard assets, like copper as collateral. This has put China in the top spot in global copper consumption. In fact, they consume approximately 40% of the world’s copper shipments.

We often refer to copper as, “the economist of the metals market.” The logic follows the line of copper as a base need for economic expansion, which we view as building stuff – houses, electronics, buildings, cars, etc. It appears that the Chinese growth story is bigger than old world economic malaise. The copper market has seen renewed interest in commercial buying since Bernanke’s tapering talk in August signaled an, “everybody out of the pool,” moment.  In fact, cash copper prices are trading above the copper future’s price and copper miners are negotiating just how high they’re going to set their premiums for 2014.

The current spot premium is around $.05 – $.07 per pound which reflects the highest premium since the collapse of ’08. The surge in demand is prompting premium increases of 50% and higher as producers negotiate with Europe, Asia and America. Codelco, the world’s largest copper producer has announced planes to raise Chinese premiums by 41%. There are similar increases of 50% for the U.S. and up to 75% for the European Union. These price rises come in the face of an expected surplus of 200, 000 tons (less than 2% of total market) after experiencing a three-year supply deficit. In spite of the projected surplus, Codelco has openly admitted that they’ve hedged none of their forward production.

Commercial traders in the copper market were what tipped me off to the market’s increasingly bullish outlook. I was so busy looking at our domestic economy that I didn’t see the rebound in their buying after initial talk of tapering, which pointed to slowing growth and declining demand created the bearish scenario I outlined in Augusts’, “Copper Points to Slowing Economy.” Clearly, the cash market premiums are leading end line users to hedge their future needs through the purchase of forward copper futures contracts.

The largest net long position I can find for commercial traders in the copper market is near 40,000 contracts. This was made during the July sell-off. Previously, the largest net long commercial position I could find was in February of 2009 when copper was trading at $1.75 per pound and we were coming out of the major market crash.  What the market is seeing now is a greater willingness to own copper at much higher prices. This buying support is putting a floor in the market around the $3 per pound level and is prolonging the sideways market direction that has persisted throughout the year. The longer this occurs, the closer we are to breaching the downward sloping trend line that originated at the 2011 highs around $4.80 and now comes into play around $3.36 per pound. Obviously, a move above this would confirm the move for 2014.

We see two potential concerns in this 2014 scenario. First of all, China has always been an opaque marketplace where the economic statistics produced by the government must always be taken with a grain of salt. There is talk that end line demand is nowhere near as strong as Chinese imports suggest. However, for our purposes, it is pretty irrelevant if China is using their copper imports or, storing them. Either way, supplies are being taken off the market. Secondly, much of the mining that’s counted in moving us to surplus is in new mines whose production is only estimated. Therefore, their production numbers aren’t yet solidified. Finally, all things considered, copper may be one of the best physical assets to own as we approach 2014.

Copper Points to Slowing Economy

Copper is often referred to as, “the economist of the metals markets.” This is because of its use in all things that make the economy go round from electronics to commercial and residential construction and general infrastructure. When economic development is robust, copper prices follow suit. More importantly, because copper is a base ingredient in this mix, the price of copper typically precedes any moves in the general economy. Based on the current conditions of the copper market, we expect prices to fall and with it, overall economic activity in general.

The Federal Reserve Board announced its intentions to begin tapering off economic stimulus on June 19th. As a result, Interest rates have soared. Since the Fed’s announcement we’ve seen mortgage rates rise by nearly a full point from May’s low to multi-year highs. This is a 15% increase in two months. The effect on mortgage applications is already taking hold as we’ve seen a decline in mortgage applications of more than 7% in the last two months. This has led to a 13.4% decline in new home sales for the month of July, the biggest decline in three years. Rising interest rates are slowing the economic recovery that has been led by the housing market.

No copper scenario is complete without discussing China. China is the world’s largest copper consumer, taking around 40% of the annual mining total. Unfortunately, separating the governmentally supported information handouts from the man on the street’s first hand economic observations is a difficult task in a country where information is so heavily monitored and controlled. The major news events this week are twofold. First, a group of Chinese investors are stalling on a $3 billion copper mine investment in Afghanistan. Their reasons are many but the five-year delay they just inserted into the talks suggests that the investors aren’t comfortable with current, physical demand levels. Secondly, Chinese manufacturing data, though signaling signs of expansion last month, appears to have done so through inventory reduction more so than actual production. This was seen in the contraction of new export orders, stocks of finished goods and employment.

Funneling the macro data into something tradable leads us to further bearish scenarios.  Commercial traders were actively listening to Bernanke’s discussion signaling the end of the monthly injections of $85 billion into our economy. Commercial copper traders clearly see this as a negative as they’ve been net sellers in five of the six weeks since the announcement. Perhaps more importantly, this comes after they had accumulated a very large position around the $3 per pound level we’re currently trading at. This suggests that they were locking in future deliveries based on continued economic expansion prior to the Fed’s announcement. Their actions since clearly state their change of attitude going forward and perhaps most importantly from a trading standpoint provides the potential serious selling if they decide there is no longer a reason to own copper at $3 per pound.

Finally, moving to the technical side of the market it appears that copper’s strength over the last three weeks may have more to do with speculative short covering rather than the creation of new long positions. Copper volume reached its highest level since December of 2009 on June 28th. This coincided with the lowest prices seen since October of 2011. Expanding volume coupled with declining prices is indicative of a strengthening downward trend. This becomes even more obvious in light of the rapid decline in volume and open interest over the last three weeks as the market bounced off its lows.

We feel that the slowdown in domestic construction that has been brought about by the Fed’s actions coupled with a large and now, unnecessary commercial long position will force the copper futures market to follow its typical seasonal path and decline through the end of October. This should certainly lead to a test of the psychologically important $3 per pound level. Violating the $3 per pound level leaves only the 2010 low of $2.90 as support before bringing into question the economic crisis low of 2009 near $1.50. Remember that commodities are not corporations. The world can live without another corporation but copper’s base necessity will serve to put a floor under the market. Therefore, a violation of $3 and even $2.90 is possible however, the market will find waiting buyers at bargain prices.

Measuring the Metal Markets

The recent selloff in the metal markets has broken the sideways trading range they’ve been in for more than a year. We’ll begin by briefly recapping their recent history back to the 2011 high water marks. Copper was the first market to peak. An expanding Chinese economy and a low interest rate environment drove this market.  This led to large end line consumers purchasing forward contracts to meet future demand. Finally, copper peaked at $4.65 per pound in February of 2011. The silver market peaked in April of 2011 at nearly $50 per ounce. This was by far the most speculative of the metals markets and we’ll get into the ramifications of a speculative rally, shortly. Platinum made its high in August of 2011 at $1,918 per ounce. Gold was the slowest to peak finally reaching $1,923 per ounce in September of 2011.

The recent declines have come amid a backdrop of rising interest rates. The language coming from the Federal Reserve Board suggests that they are looking to tighten money supply and withdraw some of the excess cash that has been pumped into the system beginning in September 2001.

The recent lows mark very important Fibonacci points. The Fibonacci sequence originated in 13th century Italy by Leonardo Pisano, nicknamed Fibonacci. The mathematician found the pattern of 0+1 = 1, 1+1 = 2, 2+1 = 3, 5+3 = 8, 8+5 = 13, etc. This pattern is found throughout nature to include flower seeds, shells, pineapple segments, etc. Their adaptation to trading financial markets came through the use of wave analysis and the energy released in the action and reaction of those waves.

The trading adaptation converts the Fibonacci sequence into ratios. The ratios are then used in conjunction with peak and trough analysis to determine not only potential support and resistance levels but also, the energy required to turn the tide and begin a new sequence in the opposite direction. The two primary Fibonacci ratios used in trading are .38 and .62. These are rounded for the sake of simplicity. A trip to the beach will explain their importance in that wave one and wave two typically encroach upon the beach by a third of normal shoreline measurement while the third wave may advance nearly twice as far prior to its retreat.

Putting these ratios to use in the metal markets we can see that gold, platinum and copper have all retreated by approximately 38% from their all time highs made in 2011. Platinum has retreated by a third, copper by 36% and gold by 39%. Silver, as the outlier has retreated by 63%, almost stopping exactly at the .62 ratio. The depth of silver’s decline also helps it hold its crown as the most speculative and volatile of the metals.

The Fibonacci numbers don’t possess enough voodoo to generate trading action on their own. However, when combined with the considerable commercial buying we’ve seen on this decline these retracements must be viewed in the context of a pullback within a longer term upwards trend. Beginning with the recent biggest loser we see that commercial traders have been net buyers in the silver market for 19 of the last 23 weeks, nearly tripling their net long position within that time. Gold, copper and platinum are also getting strong support by the commercial traders on this decline. Their actions tell us two things. First, they don’t expect the end of cheap money to be the end of strength in the metals markets. Secondly, this decline is a buying opportunity.

Specifically, we view platinum as the most attractive buying opportunity. This is based on its industrial use as well as the escalating mining cost of platinum going forward. Currently, platinum is trading below its cost of forward production. The mining cost is about $1,500 per ounce while the futures market is trading around $1,350. Furthermore, platinum is the primary component in catalytic converters of diesel engines. Diesel engines continue to take market share in Europe, India and China. This leads us to believe that in the wake of the metal markets’ declines; platinum is most likely the safest one to buy.

This blog is published by Andy Waldock. Andy Waldock is a trader, analyst, broker and asset manager. Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. There is substantial risk of loss in investing in futures.

Commercial Traders Cap Copper

Copper is frequently referred to as the economist of the metal markets. This is because copper is used in nearly everything that’s made. If it’s not in the final product, it’s certainly in the production facilities and the machines used to make it. Therefore, one assumes that the more copper a business or country buys, the more production they see in their near future. This is part of the reason copper has such a high correlation with rising stock markets. In fact, the correlation relationship between the copper market and the S&P 500 hasn’t been negative since the financial meltdown in early 2009.

The copper market made an all time high in January of 2011 at $4.7735 per pound. Since then, the market has consolidated primarily between $3.25 and $4 per pound. The consolidation continues to tighten and can be easily seen on a weekly chart as the trend lines that define the highs and lows continue to converge. The news will tell you that the reason the market is in limbo is due to the fiscal cliff negotiations and that once a deal is struck, the market will see enough of the estimated $2.5 trillion pent up dollars in the domestic corporate coffers to push it back beyond its highs.

I would suggest an alternative scenario in that the copper market has been fueled by growth overseas in developing markets and that it may have run its course for the near term. The top performing stock market for 2012 is Turkey. Their market is up nearly 50% for the year. Much of their success has been due to their ability to create a stable and labor friendly manufacturing center. Rounding out the top ten for the year are – Pakistan, Philippines, Thailand, Estonia, Nigeria, Kenya, Denmark, Germany and India, respectively. Germany is the only G7 country on the list and India is the only one of the BRIC’s to make the list. Clearly, this has been a good year for developing countries.

Digging deeper into the numbers behind the copper market we find some signs that the market price may not be supported by the development of the aforementioned economies. In fact, the deeper we dig, the more it looks like the market is being propped up by inflation expectations and speculative purchases. The main issues are the Chinese and U.S. economies since they are the number one and two copper consumers in the world, respectively.

Commercial traders have sold more than 12,000 contracts, about 25% of their position, over the last month and now hold the smallest net long position since late April. This selling has been enough to turn commercial traders’ momentum negative and set up a sell signal as the last bit of this rally has been driven by speculators and index funds.

This type of behavior is typical of a market that is moving sideways. Speculative participants tend to be buyers at the highs and sellers at the lows for two primary reasons. First of all, they’re afraid to miss the next big move. Secondly, they can’t match the commercial traders’ staying power and end up forced out of the market every time the market looks like it’s about to fall. This is exactly why we use the commercial traders to signal which side of the market we should be on and then use the speculators to create a bounce to sell or a dip to buy within the context of our overall outlook.

That being said, we will be looking for opportunities to sell March copper futures on any speculative rallies that stop short of the downward sloping trend line from the January 2011 highs, which now comes in at $3.7330 on the weekly chart. We’ll maintain this stance as long as commercial traders continue their selling pressure as we believe that is what will ultimately force the speculators to abandon their long positions.

This blog is published by Andy Waldock. Andy Waldock is a trader, analyst, broker and asset manager. Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. There is substantial risk of loss in investing in futures.

End of the Metals Rally

The mineral and industrial metal commodities may be nearing the end of their decade long rally. I think a very good case can be made for the highs to be put in sometime in the next twelve months.   Political agendas and inaction should support the metal and mineral markets heading into next year. However declines in global demand, a slow down in infra structure creation, higher production taxes and the eventual global debt crisis will bring these trends to an end.

First of all, the supporting case comes from a global political cycle that is determined to maintain the status quo. Here in the U.S. QE 2 is set to end next week. Most of the money that went into this program that was designed to stimulate the economy never made it out the front door of the lending institutions that received it. The money was used to strengthen the banks’ internal lending reserves, rather than passing it on to the public at the low rates at which they received it. Therefore, the individuals and small businesses never received the assistance and won’t miss it when it ends. Furthermore, the debt ceiling, which has been kicked down the line until August will find a way of being raised, extended, supplemented, etc. Neither political party in the U.S. wants to be responsible for causing a governmental work stoppage or promoting an unpalatable solution in an election year.

Globally, support comes from both the European Union, determined to postpone the situation in Greece as long as possible as well as the coming Chinese elections. This most certainly means bigger problems down the road. Until then, these two will both keep throwing good money after bad in two of the largest economies in the world. Europe has no solution to the Greek debt problem and the Chinese leaders vying for President will keep their individually governed areas rolling in the fiscal stimulus and distorted GDP figures until after their elections in January of 2012.

Unfortunately, the headwinds facing the industrial metals and minerals markets have been gaining traction for quite some time and are far more widespread. The obvious follow up is the pending global slow down. The debt issues of Europe and the U.S. must be reckoned with. When this is combined with cutting Chinese building subsidies and severely raising the mining taxes in Africa and South America, the markets will be forced to absorb the excess capacity of the Chinese buildup in the face of declining profit margins at the mine.

Platinum, copper, and mineral mining have increasingly shifted to African countries. Many of these countries have not received the compensation from the development of these industries they had expected. Some of this is due to corporate accounting that kept revenues off the books. Let’s face it, if General Electric can avoid paying U.S. income tax like it did in 2010, it shouldn’t be too hard to assume that corporate accountants for multi-national mining companies can evade the tax collectors in third world economies like Tanzania, Zambia and Ghana. The local governments, feeling slighted after the metal and mineral price run up in 2008 are enacting much tougher tax laws and strengthening their central governments in order to nationalize (seize) assets that have underpaid. These actions are similar to state run South American enterprises and will make ownership of publicly traded companies less attractive.

Finally, there is no question that global liquidity is at an all time high. Currency depreciation will continue to influence the metal markets as investors look for a safe haven store of value. However, if governmentally stimulated demand dries up or if the sources are over taxed, we will be left with empty buildings and unemployed workers. This decline in demand will outpace the draw on warehouse stores and lead to a decline in prices as the global economy finally comes to terms with itself in 2012.

This blog is published by Andy Waldock. Andy Waldock is a trader, analyst, broker and asset manager. Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. There is substantial risk of loss in investing in futures.

Diversification is not Immunization

Every market crash or bursting bubble is like the ice cream truck calling kids to the street. Portfolio managers and re-balancers know they get the opportunity to truly be heard only when something goes wrong.

Most people live their lives reacting to new stimulus. If something hurts, they don’t do it again. If something works, there’s no reason to change. Portfolio managers attempt to anticipate areas of pain and mitigate that pain wherever possible. However, there are times when efficient portfolio analysis, modern portfolio theory and just plain common-sense investing will still force one to endure periods of pain.

Portfolio composition is usually based on a collection of assets that tend to relate to each other in a predefined and expected way.

There are three basic relationships:

— Positive correlations: Two asset classes rise or fall together, predictably.

— Negative correlations: One class rises when the other falls and vice versa, predictably.

— Non-correlational: No predictable relationship.

The right balance of these relationships across multiple asset classes will smooth out returns and help to insure the predictable performance of one’s portfolio.

There’s an old saying from statistics 101: “Correlation does not equal causation.” We can measure how markets move relative to each other, but without understanding their relationships, we can’t say for certain what caused what. Sometimes, understanding “why” has a bigger impact on one’s portfolio than the actual mix of assets.

Last week we saw many markets fall. The stock market is lower, as are precious metals, bonds, grains, coffee, sugar, cocoa, crude oil and the energy markets. Many of the classic market relationships people use to balance their portfolios failed to behave in the anticipated manner and did not balance the risks associated with investing. Markets can and do, behave in unanticipated ways.

Commodity markets have been trending toward generally higher prices. The stock market has also had a nice rally and is up more than 9 percent since Labor Day. During this time, the Federal Reserve Board also announced a second round of quantitative easing to keep interest rates low and weaken the U.S. dollar. Consequently, bonds have rallied in price while the dollar has fallen.

The sudden about-face in many of the markets is twofold. First, the news regarding Ireland’s financial health has become increasingly pessimistic. Ireland was on the financial default radar, along with Greece, more than six months ago. Ireland has been very proactive in implementing domestic austerity measures to rein in spending. Furthermore, Ireland has also steadfastly maintained its financial issues are limited to a few banks that became overleveraged during their own housing bubble.

Unfortunately, the European Union has the same fears about Ireland and Greece we did in the U.S. with our own domestic banks and that is that every bank was more overextended than initially thought, requiring an even bigger lifeline to maintain solvency. Finally, Portugal and Spain are also on the verge of financial insolvency themselves.

The second fear to hit the markets was China’s announcement Wednesday its economy may be overheating again. Rumors are circulating China may follow several banks in Korea in raising its interest rates to slow down inflation and thus, economic growth. The data coming out of China certainly reinforces the idea it may constrict lending in the near future. China has a published cap on the amount of money its nationalized bank will lend in any calendar year and it is quickly approaching that ceiling.  The fears are also evident in China’s stock market, which has slid more than 5 percent in the last few sessions.

These two events combined to cause havoc in our domestic markets as they immediately unraveled the underpinnings of our market rallies. The Chinese news sucked the demand out of the commodity markets. China’s clampdown on inflation is pulling money out of the commodity markets and reducing overseas demand for raw materials. The news from Ireland and the European Union has the equity markets spooked. For many investors, the 50-percent correction in the equity markets from our own financial crisis is all too real and all too recent. Our domestic stock market’s rally and the quickly approaching year’s end makes it easy for many traders and investors to simply pull money out of the markets.

News events shock the markets and broadly sweeping economic forces create seismic shifts in market behavior. During these turbulent times, typical market relationships may fail to behave in the predicted manner.

As the Chinese economy becomes a first class consumer, we must accept our role as a supplier, rather than our historical position of end line consumer. As a supplier, we need to recognize the demand-needs of our trading partners. This is a broadly sweeping change that will affect the commodity markets for years to come.

News from Ireland and the European Union can shock the stock market, reawakening nightmares of 2008, but plans can be made to account for these events.

It does require proactive management of one’s portfolio. The old days of the passive hedge and allocation strategies may be gone.

This blog is published by Andy Waldock. Andy Waldock is a trader, analyst, broker and asset manager. Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. There is substantial risk of loss in investing in futures.

Short Selling the Futures Market

Since the stock market’s dramatic sell off on May 6th, it has traded sideways to lower. The market has made new lows twice since then while each rally attempt has been capped by resistance roughly half way back to the top. Technically speaking, this is called consolidation and consolidation usually means continuation. The idea of an object in motion remaining in motion goes back as far as Isaac Newton and it still holds true to this day. This motion is what trends are made of and that is why consolidation is viewed as a pause in the existing trend’s general direction and in this case, the trend is down.

Over the last two months of consolidation we’ve also seen volatility increase to the downside. There have been twice as many big down days as there have been big up days. The largest down day came as the result of June’s monthly unemployment report, which resulted in a sell off of 4.5% to nearly 6%, depending on the stock index. Additionally, this month’s unemployment report comes out Friday, July 2nd. The national rate currently stands at 9.7% while Ohio is full a percent higher at 10.7%. Furthermore, several leading economists feel that our unemployment situation has yet to peak. Finally, July through October is typically, the seasonally weakest period of the year for the stock markets.

Clearly, there are no guarantees as to the future direction of any market. However, it is unwise not to take into account the current weighting of pros and cons when making financial decisions. That being said, what actions are available to someone who has owned a stock like General Electric for so long that the dividends and splits of the stock have left them with a cost basis of virtually nothing? Therefore, any sales of the stock would be subjected to substantial capital gains taxation. The typical response in this situation is one of helplessness. Just ride it out. The stock market comes and the stock market goes.

There is an active alternative to this feeling of habitual helplessness. That alternative is the calculated use of the futures markets. The construction of a futures contract is based on the agreement to either make or, take delivery of a given contract by the contract’s future delivery date. This is the basis of the old cliché, “Where do you want your load of pigs?” The reality is that less than one percent of the futures contracts traded are ever delivered and those delivered, are by design. Every trade in the futures market requires a buyer and a seller. The usefulness of futures is that it doesn’t matter how you initiate the trade. You can create a new position as either the buyer or, the seller and exit the trade prior to the delivery date thus, eliminating delivery issues.

Lets walk through a real world scenario using the General Electric example above. The owner of the General Electric stock wishes to protect their investment without having to pay the capital gains taxes on a lifetime or, generations of accumulation. Assuming the expectation of the stock market is lower, an appropriate amount of stock index futures can be sold to create a new position. This is called a short position and it makes money if the market declines in value. The portfolio has been protected by, “selling high.” If the market does decline or, the perspective on the market changes, the futures trade is offset by buying back what has been sold. This is, “buying low.” The cash difference between what has first been sold high and then covered by, buying low, is the profit accrued on the trade. This profit can be used to offset the loss in Cedar Fair on the broad market’s decline.

This same strategy can be used to generate protection or, profit in any market that is expected to fall. These include agricultural contracts like corn, soybeans or, cattle and also include things like the U.S. Dollar or gold and silver. The commodity markets were designed from the beginning to be used as a tool to hedge risk. This tool is available and applicable to a wide range of individuals and their respective needs. Furthermore, we can track the professional’s trading positions through the Commitment of Traders Report and use it as guide to time the entr4y of a short position. The next time a market is expected to decline don’t just sit there helplessly and watch the market value of your holdings – stocks, cash, precious metals, grains, etc. decline with it. Once educated, ignorance is no longer an excuse.

This blog is published by Andy Waldock. Andy Waldock is a trader, analyst, broker and asset manager. Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets. The commodity markets employ a high degree of leverage and may not be suitable for all investors. There is substantial risk in investing in futures.