iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,468 Blog Posts

Inflation Trade On

Despite today’s decline in the general indices, it was a terrific day for commodity related stocks. I believe the stocks are telling you what’s coming.

As a result, I am now heavily positioned in OXY, ATPG, WNR, CENX, AKS and EXK. Additionally, I am long shares of ALJ and CVI.

In short, I put my money where my mouth is and will be eagerly awaiting to see positive results.

As an aside, I booked an egregious personal loss in ZSL, after having an equally egregious paper profit just one week ago. Ten years ago to the date (I remember because tomorrow is my birthday), I booked a tragic loss in my personal account. Let’s just call it my ten year anniversary. And, yes, history does have a weird way of repeating itself.

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49 comments

  1. Johnny2time

    It’s deflation that plagues the US and Europe not inflation. Gold and silver are unique in that they perform well both in deflationary and inflationary times (monetary instability really).

    Long silver and gold, short IWM and FXE.

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    • deehydration

      Have you been asleep since March 2009?

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      • Johnny2time

        No, I’ve been long the “QE put” reflation trade and now that trade is ending.

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        • Mr. Cain Thaler
          Mr. Cain Thaler

          It’s not a reflation trade when the commodities break out to historical highs. Inflation and QE go hand in hand.

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          • Johnny2time

            Why is TBT not breaking out to all time highs if we’re in an inflationary environment?

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      • johnny2time

        Why did the Fed see it necessary to begin a program of quantitative easing? Deflation.

        It worked to drive up prices in the short term but did not work to solve the underlying deflationary long term fundamentals.

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        • derrr

          Gold doesn’t perform well in deflation. Yeah, it did in the 30s when the dollar did well and guess what you could exchange the dollar for? gold? with no gold standard gold does not do well in deflation. only reflation, stagflation, inflation, and the general “scarcity principal” in that basic materials are being used up and there’s a limited supply. But to say gold does good in deflation is not true.
          gold does however do well when the politicians manage the money supply poorly.

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          • Johnny2time

            Funny, I’ve got a monthly chart of gold right in front of me that begs to differ.

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  2. Dubz

    Happy Birthday (ya it’s a day early but whatever)

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  3. alphadawgg

    Own gold, gold miners, gold ETFs as a safe haven.

    Silver is a derivative of gold, made for speculation. It’s too fast and loose here. If people are patient, I think they can buy it in the mid to low $20’s before year end.

    Goldman must want to unload their energy and commodity stocks at some point, prior to the U.S. sinking further into a Depression, else why pump up commodities?

    Just saying….

    (I don’t trust those guys farther than can kick them)

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    • mhass33

      Oil got viciously rejected at $100 today. If the move to $130 was legit like GS said, I think it would have popped clean over 100 today. I think you are right about the pump and dump. I am long $VXX over night here.

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    • Jakegint

      Little nervous to see the traditional gold bashers have moved far enough to the middle to admit that gold may actually be an “ok” investment here.

      When you decide silver is ok, I’ll really start worrying. 😉

      ____

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    • derrr

      I don’t think silver is derived from gold, although both are derivatives of the earth. Silver’s price may be a derivative of gold though

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    • jobeans51

      You are so right. Will you let me know when GS is going to dump their commodities?

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  4. Trading Nymph

    India/China Spot Iron Ore price still trending down with little interest in buying. Eur/USD spiked on inline Ifo data, yes my little US Dollar didn’t make it back to 76.00 before the close, but the Eur/USD was sold on the rally and is below where it was when the data came out.We have plenty of Econ Data coming out of Australia I have high hopes for my little Dollar….that GS upgrade is now history and we can proceed with our Risk Off Play.

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    • fmi

      that’s nice & all, but how can that info be used to trade?
      fmi – forgive my ignorance

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      • Ray Manzarek

        Be kind, man. Nymph isn’t into revealing trades, dude. She’s more like a poet. Ya know, the Jim Morrison of iBC.

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        • cockstanding

          She is not really a she, I found out the hard way

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          • FakeTradingNymph
            FakeTradingNymph

            Leave…her…alone or else.. I will get some copper….from the record stockpiles.. in China.. and … just leave her alone

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      • Duncan_McCloud
        Duncan_McCloud

        she’s expecting the Aussie news to be good driving the Euro up (even for a short count)…buying the dip…or she is poised for a quick scalp from the pop to the downside…looking for opposite reaction on the the U.S. dollar…thus driving commods up or down…depending and stocks overseas to climb on good news or plummet further …hope this cleared things up

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        • Trading Nymph

          Duncan, Actually I was expecting the Aussie news to disappoint, which it did. The Oz or Australian Dollar is a commodity currency so when it is weaker the Euro is sold which helps the US Dollar. Which it has, now back over that 76.00 I was waiting for…..fake Nymph…rofl..well that is one use of copper, lol, darn copper bubble…Cockstanding, I am all female, just ask Jim Rogers, James Altuchur or Jim Cramer…they can confirm that. Ray…thank you…this is True Art in its rawest form………….FMI, look at 2008, we had a commodity rally were tech,coal, ore, copper, etc benefitted from a weak dollar. Once the dollar reversed and rallied the market sold off strong. Well, its happening again. Pull up the US Dollar Index at Bloomberg…and short all global growth names as long as the US Dollar stays over 75.00.

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    • Alvari40

      Looks like your little dollar is beginning to grow a pair.

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  5. panamaorange

    How can anyone call this a correction when XRT XLY and IYR sectors can’t even make it below their 50 day moving averages?

    And how can anyone claim we are in a new tech bubble, when QQQ has been sideways for 5 months?

    Alot of convoluted assumptions are floating about in the financial world

    http://www.youtube.com/watch?v=Ocy8TseK88I

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    • johnny2time

      “How can anyone call this a correction”

      By looking at charts of the dollar and major indexes combined with the fundamentals. Dollar down and commodities up made sense when QE wasn’t ending in a matter of weeks.

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      • Jimmy Bowtie

        QE ending in a matter of weeks

        Has the Bernank ever said anyting that turned out to be true?

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        • johnny2time

          Well he had better announce it to the financial world if he wants higher equity prices.

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  6. Mick

    two words on todays purchases…. “your early”

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    • Cascadian

      Actually, it should be “you’re early”, as in “you are early.” But that would be 3 words.

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      • stinkystank

        lmao, kinda important to get your grammar correct when trying to own someone

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  7. panamaorange

    Sounds like you need a quick lesson on “you’re” vs. “your”

    http://video.tvguide.com/Frisky+Dingo/Doom/339264

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  8. theedge111

    I dunno Senior Fly

    The bond market always gets it right and yields are compressing. Euro troubles should strengthen the dollar which will put pressure on the commods.

    Best of luck. Rather be short stocks and long metals here as a hedge because the deflationary pressures.

    If QE2 ends then the inflation trade could get smashed.

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  9. Baron de Rothschild
    Baron de Rothschild

    I did something sofa king stupid. When it looked like the market was going to take off in this morning’s premarket, I put in a what I thought was a massive, low ball offer on shares of UPRO. Not only did I end up owning them, but the ETF is already tanking in the after market. I will sell on the open, but I am already ass reamed unless an overnight miracle pushes the euro up. Chances are that the inverse will occur. Phuuuuuuuckkkk meeeeee!

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  10. hammer

    Where’s V.King?

    Looks like somebody knows something about LMLP.

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  11. No One

    Really curious how the AIG plays out. XLF should see a bounce here. Let’s not forget the PPT.

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    • razorsedge

      aig lookin at there stock for the last quarter, great! oh wait have the chart upside down,,,

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    • No One

      And I’m betting it may be over.

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  12. razorsedge

    LNG, CLNE, nuf said

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  13. johnny2time

    Wow look at all that inflation out there!

    http://www.reuters.com/article/2011/05/24/us-usa-gasoline-demand-idUSTRE74N6FM20110524?feedType=RSS&sp=true

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  14. Colonel von Ryan
    Colonel von Ryan

    There can be no inflation in today’s economic environment. Wages are stagnant, job creation is stagnant, house prices are stagnant. The more folks spend on gas the less they can afford to buy causing prices to stagnate. And because of our weak dollar imported goods become more expensive for us to buy. This is called stagflation. It happened in the 70’s under Carter, it’s happening now under Obama for the same reasons. High taxes, unsure future, destabilized geopolitical environment. This is the new normal that the President has told us to live with…

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    • go2mars

      Were Weimar Germany or Zimbabwe in a better econimic environment? Were the 70’s deflatonary? You’re dependent on a global commodity (oil) to a great extent, which doesn’t care what the American economy is doing. Prices may stagnate for things like haircuts because more competition from poor mom’s shows up. But global commodities (metals, oil, food) will soar in price relative to your dollar.

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  15. johnny2time

    The current action in the futures market tells me the deflation argument is correct…

    http://www.youtube.com/watch?v=aNUr__-VZeQ

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