Category: Commodity Options

Gold Will Continue to Shine

The U.S. consumer price index rose 0.5% in February from the month before, pushed higher by food and energy costs. The price index for all items climbed 2.1% over the past year.

But many think government-reported inflation numbers don’t present an accurate price picture. Some economists estimate the true rate of inflation is closer to 8% or 9%. And those numbers could rise higher as the U.S. Federal Reserve continues to pump billions of dollars into the financial system.

Inflation, coupled with political turmoil in the Middle East, has pushed many investors out of stocks and into commodities. Gold rose to a record $1,445.70 an ounce on March 7. Market uncertainty from the Japan disaster pushed the metal down to $1,380.70 on March 15, but it gained again this week to hover around $1,400 an ounce.

Hedging Silver

Silver – like gold – has enjoyed a high-octane surge. But what now? How do you keep chasing the profits that inflation is sure to bring without risking the loss of those profits should silver prices reverse? Well, options expert Larry D. Spears last week showed investors how to hedge against a possible decline in the price of gold – and this week he’s back to do the same ….

Commodity Market and Commodities Exchange

Commodities exchanges usually trade futures contracts on commodities, for example, in a certain month, A farmer raising corn can sell a future contract on his corn, which will not be harvested for several months, and guarantee the price he will be paid when he delivers; a breakfast cereal producer buys the contract now and guarantees the price will not go up when it is delivered. This protects the farmer from price drops and the buyer from price rises.