If you are in the metals market, your eyes are certainly watching the action out of China. The more the country builds and expands, the higher its demand for anything that is pulled from the ground.

If you have been paying attention, you already know copper prices reached their highest prices since last October early yesterday. Buyers had to shell out $6,258 for a metric ton of the vital base metal.

While it is disappointing to see prices slipping today, it is no surprise. The commodities markets have often moved in lock step with the global equities market. And with mixed economic data coming from Beijing today, it is surprising prices are not down even further today.

Even with a few nuggets of less-than-expected data, China’s economy is one of the quickest expanding on the planet. Earlier today, Goldman Sachs (NYSE:GS) made the not-so-bold move of increasing its GDP expectations for the country from an annual rate of 8.5% to 9.4%.

Many investors are starting to wonder if it is time for Beijing to begin unwinding its recent stimulus measures.

No matter what the government does in the next few months, there is no debating China is at the center of the world’s commodity demand. Its desire to expand is the lifeline keeping the sector afloat.

With virtually no chance of a major disruption in its role, China is making the commodity and mining sector a fine investment.

Go ahead, make your move

While I have recommended several optimized plays for TFN Strategic Trader subscribers, I know of plenty of investors looking for a plain-vanilla sort of way to play the situation.

Anytime we need simple, the ETF market is there.

The SPDR S&P Metals and Mining (NYSE:XME) fund gives investors a pure shot at one of the most potential-filled industries on the planet. The fund includes holdings of powerhouses like Massey Energy (NYSE:MEE), United States Steel (NYSE:X) and Titanium Metals (NYSE:TIE).

Between those three companies alone, investors get a shot at a recovery global economy.

Of course, ETFs are great investments for the set-it-and-forget-it investing crowd. But they are not for everybody. With diversification comes lowered risk and lowered reward.

And anytime you are paying somebody else to do your buying and selling, it will come with a cost. In this case, SPDR charges 0.35% of your position, a fairly low fee in a high-priced industry.

But if you have been watching the commodities sector on the sidelines, eager to make a move, and are unsure how to do it, I think you just found your answer.

ETFs are a great way to enter the investing world on a low-cost, low-risk basis.

Source: Use the ETF Market to ‘Mine’ Commodity Profits

Can’t you hear Nancy Pelosi saying to some farm-belt democrat, “What’s it going to take to get you into this climate bill tonight?”

One of the easiest “outs” for a potential car buyer is to say, “I like it, but let me go home and talk to my wife.”

It is no different with shoddy legislation. “I like it,” say our fence-sitting lawmakers, “but let me go home and talk to my constituents.”

Knowing if a customer leaves the lot, he may never come back, House leaders are working overtime to ensure the latest nefarious piece of legislation to come off of Capitol Hill gets a vote before our elected officials head home for the Independence Day break.

If these guys go home, the deal is off the table, possibly for good. You can count on it.

That is why we will likely see a vote on Cap-and-Trade legislation on Friday. It is the oldest trick in the sales book; rush it through while the emotions are high and don’t give them time to think about it.

The tactic worked perfectly with the trillion-dollar stimulus plan. Remember how many legislators read the actual legislation? We all know how that deal is working out.

All we can do is hope our leaders learned from their mistakes.

The market has spoken

Studying Wall Street, the market appears to have already cast its vote. With most energy stocks well in positive territory so far today, investors are not worried about potential new emissions regulations.

The industry that best indicates the market’s sentiments is the coal industry. While Daryl Hannah is getting arrested outside a Massey Energy (NYSE:MEE) facility, the sector is moving ahead as if the threat of strong obstacles ahead is nowhere in sight.

Massey, Arch Coal (NYSE:ACI), Consol Energy (NYSE:CNX), and my favorite coal producer, James River (NASDAQ:JRCC) are all making strong gains today.

The action is the Street’s way of saying Washington won’t be driving House Bill 2454 off the lot anytime soon.

But the market is not always right.

If it is wrong, savvy traders will have a strong profit opportunity on their hands. If the coal industry suddenly forces great headwinds, today’s prices could look downright expensive.

It is a gutsy bet, but as the week progresses could be one worth taking.

Options players have the best shot at profits. Front-month put contracts will soar in value if the above-mentioned companies take a blow later in the week.

This legislation is moving far faster than most pundits would have imagined just last week. That means the market has had very little time to study the situation and digest the estimates. It also means there is plenty of room for increased volatility.

When the markets are unprepared, just about anything can happen.

That is exactly the way Nancy Pelosi wants it.

Source: Right Out of the Used-Car Sales Book

It turns out I was not alone when I discussed my bullish outlook for the nation’s coal producers last week. Earlier today, a Goldman Sachs (NYSE:GS) analyst gave a similar opinion.

The only difference between my article and his note to clients? His sent the industry soaring.

As I wrote Friday, my favorite coal producer, James River Coal (NASDAQ:JRCC), used strong contract prices to beat its Q1 estimates and send shares surging. The momentum from last week’s announcement has continued through today. Over the last five trading sessions, shares of the company have jumped by more than 55%.

There is a bull on the loose, for sure.

Thanks to the analyst’s positive note, James River is not alone today. Shares of Massey Energy (NYSE:MEE) are up by over 20%. National Coal Corp (NASDAQ:NCOC) is up by about 35%. Alpha Natural Resources (NYSE:ANR) is up by 10%. And rounding out my top five, Arch Coal (NYSE:ACI) is up by over 11%.

The big question is will the gains continue?

Here at home, the only person that can answer that question is Obama. As I wrote earlier today, his cap-and-trade notion could put the crimps on the sector’s future prosperity. Fortunately, most legislators are quickly realizing the idea is one of the most politically dangerous to come from Washington in a long time.

As the cap-and-trade nonsense begins to be pushed onto the next generation of leaders’ laps, coal prices will rise again. Even better, the bullishness will take place when international growth is starting to make headlines once again. It will be a coal-industry double whammy.

If you have been following the sector, you know China has a slew of coal-burning power projects in the works. Just because we are all sunshine, lollipops and alternative energy here, does not mean Asia is giving up its ultra-cheap infrastructure anytime soon.

International coal demand will grow, setting a floor for domestic prices. With one of the world’s largest reserve of coal, domestic producers will benefit from international growth.

Essentially, even though the coal industry got slammed by the current financial meltdown and a new wave of political fury, the industry is little changed from its phenomenal run just a few years ago.

I maintain my outlook and recommend buying coal-related plays on any dips.

Source: Lighting a Fire Under America’s Coal Industry

This from Today’s Financial News:

This is turning out to be a big week for the energy markets. Prices for commodities like natural gas, coal, gasoline, diesel, and of course, crude oil are dropping precipitously. Right now, we are very close to some critical pricing levels. If we drop below them, even bigger declines could be on the way.

First off, let’s look at the king of all commodities, crude oil.

As I write, a barrel of crude is just $1.27 away from trading for less than $60. Many energy experts believe once oil drops below that crucial level, there is nothing stopping it from dropping drastically lower. With a little help from a strengthening dollar, we could see a barrel of crude trading in the $40 range by the end of the year. $30 is a stretch, but it is not out of reach.

Thanks to interest rate cuts in England and throughout Europe today, the dollar stands to continue its currency domination. When London announced it slashed its key interest rate by 150 basis points, the value of the dollar jumped almost immediately.

It now takes $1.58 to buy an English pound and $1.27 to buy a euro. Both figures were climbing over the past week, but thanks to today’s widespread increases in liquidity, European currencies are one again dropping in value. They will drag oil prices down with them.

But crude is certainly not the only source of energy on the decline. Even after a surprisingly low weekly build in natural gas inventories, the popular source of home heat is trading well into negative territory. Right now, a million BTUs of gas is trading for $7.19. Technical analysts believe if it does not close above $7.30 today, we are in for another major drop.

****** Oil at $50 a Barrel — Gold at $500 by Christmas?  ******

With stocks as volatile as nitroglycerin, gold should be trading above $2,000 an ounce! But the dollar insurrection has shaken up the commodities markets. Some experts now put gold’s downside at $500… even $400.

What if they’re right?

TFN’s options strategist Andrew Snyder has developed a gold hedge strategy that could make you money on your gold position either way. Find his Special Report on the Members Only Reports section of HotStockConfidential.com. To become an instant member, click here…

———————

According to a report by the energy department, natural gas supplies are not quite as high as most experts believed. Over the last week, inventories grew by 12 billion cubic feet. The consensus estimate was for growth of nearly twice that figure.

It is important to note that inventories are 3.7% below where they were a year ago. That is a clue that the fall in prices was not necessarily caused by a reduction in demand. It is a sign that speculators have been forced from the market.

The bullish side of energy

Finally, it is important to look at coal prices. Thanks to [stell producer] ArcelorMittal’s (NYSE:MT) announcement yesterday that it will slash its production capacity by as much as 35% in the coming months, the coal industry has suffered significant setbacks.

Coal giants like Massey Energy (NYSE:MEE) and Peabody Energy (NYSE:BTU) have been significantly wounded over the past two days. They have given back all of the gains they made last week.

Fortunately, there is a glimmer of hope on the horizon. ArcelorMittal promises it will boost production in mid-2009. That means coking coal will jump in demand and the companies that produce it will see their valuations increase significantly.

That is great news for James River Coal (NYSE:JRCC). Shares have been reduced by dramatic proportions and are dirt cheap today. I stand by my recommendation to buy the company’s stock.

The energy industry is in flux. For folks with a long-term bullish sentiment like I have, this is a great buying opportunity.

Remember… Buy when everybody else is selling.

Source:Oil nears $50: Is this a buying opportunity?

Last week the Associated Press reported, “Utilities nationwide are raising rates and are likely to push for even more dramatic increases in electric rates in the coming months.”

Americans are already strapped for cash due to rising gas and food prices and a sinking real estate market. So why’s electricity joining the scrum?

Well, a large part of the blame lies with steel… As I wrote last week, steel prices worldwide are skyrocketing. This week, we’re going to look at one of the ramifications of soaring steel prices… soaring coal prices.

Coking coal is the type of coal used in steelmaking. Demand from steelmakers is driving prices higher. In fact, many steelmakers, including the world’s second-largest producer (Nippon Steel), recently agreed to pay triple what they previously paid for coking coal.

Take a look at the following chart of coal prices since 1996…

The Global Insight coal index doesn’t contain any U.S. coal – it’s 60% South African, 30% Colombian, and 10% Australian. But the market for coal, like oil, is global. When the price of foreign coal spikes, the U.S. exports more of its coal… resulting in higher U.S. prices.

So the steel rally has swept coal along with it. But coal prices have not yet gone parabolic like steel prices. Does that mean coal is a good buy for people who are bullish on steel?

Trend followers might find coal attractive. But there’s no easy way to bet on the price of coal except through coal stocks… And coal stocks are expensive right now.

Take a look at the following chart…

Coal Stocks are Expensive

Investors are excited about the coal industry and have bid up the price of coal producers in relation to the price of coal. And any falter in the growth rate of coal prices could lead to a sharp drop in these stocks. So here’s how to play the coal boom.Wait for just such a pullback before buying your favorite coal stock. A few of the big names are Peabody (BTU), Consol (CNX), Massey (MEE), and Arch (ACI). Or you can buy a basket of coal producers with the Market Vectors Coal ETF (KOL).

Coal produces about half of all the electricity generated in the U.S. With coal prices soaring, it’s likely you’ll feel the effects of soaring coal prices in your electricity bill… But if you buy coal producers at the right prices, you should see some profit, too.

Good investing,

Ian Davis