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Two Ways To Play: Traders Get Gold Rush


Strengthen your portfolio in good times and bad.

Bloomberg reports gold surged the most in 16 months and silver gained the most in two weeks a day after the FOMC announcement.

Yesterday the Federal Reserve acknowledged increasing inflationary expectations and left the benchmark overnight rate at 2%. But traders believing policy makers wouldn't rush to raise rates and curb inflation, bid up commodity prices. Gold futures surged $31.10, or 3.5% to $913.40 an ounce in New York a day after the Fed left interest rates at 2%.

Further, the Reuters/Jefferies CRB Index of 19 raw materials rose to a record today marking a 29% year-to-date gain.

Analysts believe the economy is too weak for the Fed to raise rates in the near future.

Fed funds futures now show a 29% chance the Fed will keep rates at 2% in September. This compared with just a 2% chance a week ago.

For more, see Professor Lewis' Golden Moment of Clarity.

From the Bull Pen: Bulls can consider a variety of the gold miners. Amongst other Professor Lewis has mentioned, Gold Fields (GFI), Newmont Mining (NEM), and ASA (ASA).

From the Bear Cave: Those believing the dollar will weaken further can consider playing the dollar bearish fund (UDN). This ETF replicates being short the U.S. dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc.
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No positions in stocks mentioned.

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