Commodity Trading Trends: Precious Metals Lead The Way (BLNG, GLD, SLV, PPLT, PALL)

Jared Cummans:  As 2012 wears on, investors seem less and less sure how the year will end. Some feel that the early bull market we experienced is here to stay and that strong U.S. data only supports that claim. But others feel that such rapid appreciations in stock markets mean that we are about due for a pullback, potentially ending the year on a sour note. No matter which way you feel about the economy, there are always strategies to make a trading profit, and for the time being it looks like precious metals are it. These four metals have been steadily outperforming their commodity peers in recent trading sessions and are presenting a strong play [see also Three Reasons Why Gold Is Overvalued].

In the trailing five days alone, platinum has jumped 5%, palladium 4.4%, silver 1.4%, and gold 0.9%. But this may be a trend that extends further than just one week, as the four metals have had stellar returns so far this year: platinum (20.5%), silver (18.8%), gold (7.5%), and palladium (6.7%). These futures are typically very active and provide for a nice liquid play for most traders. For those who have an opinion on which way precious metals are headed, there are several options in the investing world to help you profit from those instincts [see also 25 Ways To Invest In Silver].

How To Play

The most direct way to play these commodities will come from futures. The COMEX offers a number of different gold and silver contracts, many of which are optionable, to give investors more than just one way to play a particular metal. Moving over to the NYMEX, there are also singular contracts/options for both platinum and palladium, completing the group. For those who are uncomfortable with the complexity that futures can sometimes offer, there are also a number of exchange-traded options available. The DB Precious Metals Fund (DBP) tracks front-month futures for gold and silver while the Pure Beta Precious Metals ETN (NYSEArca:BLNG) tracks the same two precious metals, but utilizes a unique strategy to help avoid contango issues. [Related: SPDR Gold Trust (NYSEArca:GLD), iShares Silver ETF (NYSEArca:SLV), ETFs Physical Platinum Shares (NYSEArca:PPLT), ETFs Physical Palladium Shares (NYSEArca:PALL)]

Written By Jared Cummans From CommodityHQ  Disclosure: No positions at time of writing.

CommodityHQ offers educational content, analysis, and commentary on global commodity markets. Whether you’re looking to speculate on a short-term jump in crude or establish a long-term allocation to natural resources, CommodityHQ has the information you need.


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