We Interrupt This Program To Bring You A Special Announcement

Bloomberg reported overnight that Nouriel Roubini said today (Monday) in Australia that Commodity prices will rise in 2010 as the global recession eases.

“As the global economy goes toward growth as opposed to a recession you are going to see further increases in commodity prices especially next year,” he said. “There is now potentially light at the end of the tunnel.”

The Reuters/Jefferies CRB Index jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.

“That recovery will continue slowly, slowly over time,” Roubini said today before adding that China will meet its target of 8% growth this year.

In case you don’t know who Nouriel Roubini is, he’s the NYU economics professor who predicted years before it happened that housing would crash, setting the stage for the worst economic crisis since the great depression along with the deepest recession in the post war era. He’s also the Chairman of the RGE Monitor, which is about the best place to get global economic news, analysis, and opinion.

I’ve been following Roubini for well over 2 years now and it’s been absolutely fascinating to watch a relatively obscure economics professor become true master of the universe.

Perhaps you had a chance to see my last article where I referenced something I called a Major Fundamental Event? Well, right now, Roubini’s comments regarding commodities are the closest thing we have to one. His opinion is likely to set off a trend-not only in commodities but in equities and of course currencies.

As commodities rise, the dollar is going to weaken and stocks are going to appreciate. You can’t have one happen without the other because they’re all priced in dollars.

I have a plan to monetize this and the best part is that I have a trade with a defined risk which cannot get stopped out. I’m buying December ’09 call options (which means I’m going long) on the Canadian currency ETF, ticker FXC. My strike price is 95. The reason is because the Canadian is correlated with oil and if commodities are going up, oil is going up.

Now, I’ll admit something right off the bat; I hardly know jack-crap about options but what I do know are 2 things.

  1. I can only lose the amount I spend to buy the options, no matter how far the underlying ETF falls. Therefore, I cannot get stopped out of this trade no matter what happens prior to their expiration on the third Friday in December because I’m willing to lose the full amount of what I’m trading.
  2. Roubini said commodity prices are going up. That’s it. They’re going up. End of story.