Gold and Oil – getting ready for a surge in 2010
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Lee Lowell, Stock and Commodity Options Specialist with Investment U, evaluates the commodities market – specifically the demand drivers of gold and oil, and how to play them.
Lee Lowell (Investment U):
If you’re looking for some calm during the market’s ongoing storm, don’t expect to find much in the commodities sector.
Not that this is a bad thing.
If you know what you’re doing, commodities offer some of the most lucrative and potentially explosive profits anywhere in the investment world. And because simple supply and demand is the key driver for many of these everyday products, it’s a sector ripe for volatility and speculation from hedge funds and large institutions.
Heck, you only have to look at the oil market to see that in action.
It’s not uncommon to see prices cycle from highs to lows and back to highs again in a relatively short time. And it’s this rapid-fire, rollercoaster movement that causes many would-be commodities investors to park themselves on the sidelines, rather than risk their cash.
But this is often a mistake – particularly since there are some quick and easy ways that investors can take advantage of the world’s commodities. So let’s see what 2010 has in store…
Why The Price of Oil Is Headed Back to $100
It wasn’t long ago that oil prices blasted to all-time highs around $147 a barrel (July 2008, to be exact).
But they then set off on a remarkable decline that culminated with the price sinking to lows around the mid-$30 level by early 2009 – a full $115 or so lower than the record high, which equates to a staggering $115,000 move in equity on just one contract.
But as the chart below illustrates, oil has spent most of 2009 busily clawing back a sizeable chunk of the downward move – and I expect that trend to continue in 2010.
Click here for both the oil trends chart and the rest of Mr. Lowell’s article on Investment U.
Original source for this article: Contrarian Profits
