The dollar is weak and getting weaker, taking the commodities markets for a wild, profitable ride. But natural gas has wrongly moved higher as well. Once the markets fix their mistake, get ready for a strong correction.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): If I were to give you a dollar today and promise you it would be worth less tomorrow, what would you do?
If you are as economically savvy as a fifth grader or perhaps a well-trained monkey, you’d probably trade the dollar for something you know would hold its worth.
These days, virtually anything is better than a greenback, even a pack of baseball cards.
Now imagine I gave you an IOU for a trillion bucks and said I will make good on my promise in thirty years. And once again, I’d be paying you in dollars that will be worth far less in three decades than they are today.
If I were actually able to sell you the deal (like selling ice to an Eskimo), your quality of nightly sleep would wane considerably, at least until you transformed the debt into something with a steadier value.
That is where China is at these days.
Fortunately for the United States, it didn’t take a first-rate salesman to sell China on funding our national debt. It was forced to thanks to a massive trade imbalance. But now that Beijing is sitting on nearly one trillion dollars worth of IOUs from Uncle Sam, the nation’s financiers are staying up later and later at night.
No magic pill for this insomnia
The financial rags are filled today with opinion pieces and news stories depicting China’s lopsided reserves of American dollars. If the country is not going to dump its holdings, experts are urging Beijing to at least diversify its currency portfolio.
Unless China ignorantly sticks on its current path – the equivalent of financial and political murder-suicide – something has to change.
As the dollar slowly drifts below the $1.50/euro level, it becomes more and more obvious that the markets are expecting strong action in the near future.
If you have been following my thoughts, you know I am extremely bullish on the commodities markets, not so much because of global economic recovery (that’s an added bonus), but because of China’s desperate need to exchange its greenbacks into something tangible – like oil, silver or anything else that can be pulled from the ground.
The investment opportunities in the commodities sector are obvious and have been covered to extreme. But there is one commodity that has gone for the ride but absolutely should not have.
Like Baloon Boy?
Natural gas prices recently got caught in the expanding commodities bubble, but like so many things that hitch an uninvited ride, gas prices will come smashing down.
The near-term catalyst? An overabundance of the fuel.
Right now, natural gas inventories are just about maxed out. For you numbers folks there are 3.9 trillion cubic feet of storage space across the country. Right now, there is just over 3.7 trillion cubic feet of gas in storage. New inventory records are getting smashed every week.
In other words, there’s no room left at the inn.
With more natural gas currently getting sucked out of the ground than the nation is using, it won’t take long until the spot market is flooded with the excess inventory.
When that happens, expect prices to plunge dramatically.
If you are a TFN Strategic Trader subscriber, none of this is news. On Friday, I issued my latest in-depth special report on the subject. In it I recommend three unique ways to profit from the situation.
Of course, I can’t divulge the information to such a massive audience. These are thinly traded options contracts.
But I will tell you as of early this morning, two of the three trades were worth strong gains – up 114% and 56%. The third play is down just 11% today, but shows incredible potential. (Hint: Watch this play on November 8.)
Do not get fooled into believing natural gas prices are tied into the commodities complex like gold, oil, silver, platinum and the like. Natural gas is a domestic commodity with little international trade.
Buy oil. Sell natural gas. Or click here and rack up triple-digit profits with just three simple trades.
