Commodities to Be Excited About

12/03/2012 2:30 pm EST


Dave Floyd

President, Aspen Trading Group

One well-known metal has been on Dave Floyd's buy list for some time, and he explains his outlook for it and other major commodities here.

My guest today is David Floyd of Aspen Trading and we are talking about oil and copper, some of the commodities here and how they may be affected here going into the end of 2012.  So David, let's start with oil; what are your thoughts here, what is affecting it and where is the price headed? 

Well, oil is an interesting market; it can be impacted by a whole number of things; geopolitical tensions, economic, as well as probably the quantitative easing that we saw yesterday.  When we get that type of easy monetary policy, it does tend to flow into speculative or risk on type asset classes like oil, so technically speaking oil is not the most robust, bullish pattern we have seen, but we are bullish on oil probably up into the 100's-110 area, and we are certainly at that now. 

If we can get some sort of economic growth going globally, that is certainly going to be good for oil prices, so that is where we see oil.  That obviously has a benefit for us within the currency market if we have higher oil prices we can usually count on the Canadian dollar to be a good trading vehicle based on that, so oil translates directly into the currency markets. 

All right, let's switch gears into some metals here, specifically copper, what are your thoughts here?

Copper, again it is a barometer for overall economic growth.  The chart pattern is a little dicey; it's not the most robust pattern we have seen, but again, if copper prices can kind of gain some traction in here that is going to support the macroeconomic argument or let's say the risk on argument that keeps us in the likes of Australian dollar and New Zealand Dollar and those risk oriented currency places that we like, but if we do see copper starting to break down, we have to take heed of that, and again, that is where it is so important to have that backdrop against the Elliott Wave accounts that we are looking at in currencies and conserve is kind of an early warning signal. 

If copper is breaking down and we are long in the Australian dollar, it doesn't mean we want to get out, but we certainly want to be managing that position a lot more closely because maybe copper is telling us something that is about to happen, specifically in China, big buyers of copper; therefore, if copper prices are dropping, perhaps China is not buying as much; perhaps they are not doing as well economically and that is going to impact the Australian dollar. 

All right, and then finally gold, it has been a huge rally here; is that going to continue here with the quantitative easing?

Absolutely, yeah, gold we have been bullish gold for months now; we have been positioned long gold; it has a lot higher to go.  Again, the Fed laid it on the table yesterday.  They say they have inflation contained; gold market says something different.  I'm always going to go with the market is going to say.  It is hard to put the genie back in the bottle once it is out of the bottle, and I think the way the Fed calculates inflation is debatable, let's say that, so I think the gold market is telling us that inflation is a possibility and we are bullish gold without a doubt.   

Specific levels in mind for how far it may go?

Well you know, we are up in the 1700's area now; we could probably easily go to 1800-1900 probably in the next few weeks.  We are pretty bullish on that going into the yearend. 

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