Time to Sell Commodities?
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Time to Sell Commodities?

Time to Sell Commodities?


Trading Features / Strategies from Simon Denham of Capital Spreads.

Has the big run on commodities come to an end?

Big falls in Oil, Silver and Gold over the past few days come after all three failed to regain their highs after the initial sell off of a few weeks ago.

For the first time in quite a while the downside looks more probable than the up and the attraction of precious metal ‘protection’ at these prices does not now seem quite so secure.

With the dollar having quickly reached quite extreme levels (rather than engaging in a long slow decline) the potential for further currency induced strength in the dollar denominated commodities has been some what reduced.


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For the Europeans or Japanese the price of Gold, for instance, equates to only around $730 in local currency if you take into account the falls in the greenback. For investors from these centres the risk now becomes ‘twin pronged’ with any further weakness in the dollar and a falling market giving a double whammy to values.

Up to now we have seen the rise of the Far East as a one way route to higher prices as the demand from these countries where precious metals still retain an historic attraction as a measure of personal wealth. With the steady demise of the dollar this vision has been bolstered. About two weeks ago, when gold peaked over $1000, I reported that suddenly every journalist on the block had suddenly become a commodities bull and commented that this was as good a sell signal as you were ever going to get!

Crude Oil had a pretty solid down day falling $3.50s and this was after rallying over a dollar and half at the start of trading and gave a total range of six bucks. Over the past two weeks there have been three big falls of this nature and whilst the ensuing bounces have push us up to almost the same highs as before the important word here is ‘almost’. Each rally peaks at a lower point and this is often seen as a classic sign of a tired bull run.



The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.


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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.

'Time to Sell Commodities?' edited by DB, updated 01-Apr-08



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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.


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