Dear Reader,
Silver and Oil plummeted las week. 10% down day move should happen very rarely with 0.1% probability according to the normal distribution... In the last decade there have been more than 10 such daily moves...
Well, did the commodity bubble burst? In my opinion, not yet. The really interesting events will unfold when the FED exits the QE 2 program. Volaility will certainly pick up substantially.
For now, I am going to sit out and wait. Oil broke through the psycholgical barrier of 100 USD, silver is not far from 30 USD. Once these barriers are decisively breached, a good hypothetical idea is to buy 4 months-1 year out call options on SLV, USO, GLD.
Disclaimer: Please be advised, this is NOT a reccomendation to buy the mentioned securities, commodities or their derivatives. This is just my personal, hypothetical view on the markets. I do not own any of the mentioned commodities (apart from regular day to day use) or their derivatives traded on exchanges, and options on indices or ETFs, stocks traded on exchanges and I do not plan to own them in the next 72 hours!
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