Commodities Prices Ready to Soar on GSCI Breakout (Chart)

Goldman Sachs Commodity Index, Weekly Bar.

I decided to use the weekly chart so you can get a better long term perspective.



The daily GSCI chart broke out to the upside on a close over 380. The weekly chart is now breaking out with a close over 400. Next upside target is 460. This might not seem like much, but it is 15 percent. The GSCI is currently over bought so there could be some chopping around before we head sharply higher.

I have been posting the charts on money supply, the FED balance sheet, and reserves for months. They all look like a gushing oil well. I wrote some time ago that it usually takes 12-18 months for these effects to bring inflation. We are now inside those windows.

I am also following long term interest rates. The Fed was in buying size and this caused a short term back up in prices. This will be a short term phenomena. A real battle is brewing between the FED and the bond vigilantes. The FED has used about 30 percent of their announced bullets already.

Expect commodity prices to trend higher over the next several years.

A good look at the GSCI chart shows a 2008 high near 900 on the upside. Since the GSCI is heavily weighted in oil, it is likely that a long list of commodities will make new highs before oil.

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Copper Soaring, China Buying (Chart)

Cash Copper, Daily Price Mark



The chart contains a single price (dot) for each trading day.

Notes:

• The price of copper is moving up fast. This is being caused by buying out of China.
• China is a large importer of cooper. They import about 85 percent of their need.
• On December 24, copper traded at the low price of 124.75.
• Today the price was marked at 212.55.
• The price of copper has risen 70 percent in the last 4 months.

You should be looking at Freeport McMoran (FCX). Freeport benefits from rises in the price of copper. The company is also a large producer of gold. We will cover Freeport McMoran tommorow.

You should note the effect that demand from China can have on commodity prices. One theme that should become evident is that when China starts to demand the supply of a commodity its price is likely to rise dramatically. This will create lots of opportunites for smart investors.

There are several ways to take advantage of thirsty demand for commodities from China. These include: sector stocks, ETFs, options, and commodity futures contracts.

We will be honing in on these opportunities in the days and weeks ahead.

So stay tuned daily.

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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