Is nowhere safe? Even physical assets – which are usually considered a safe-haven from stock market turmoil – have fallen sharply in the last month. Only gold and silver have held up against the tide…just. Commodities specialist Lee Lowell says there will be plenty more volatility in the weeks to come. But he says those who do not join the panic selling will win out in the end…

This from Smart Profits Report

Unless you’ve been living under a rock these past few weeks (and many investors probably do want to crawl under one), you’ll know all about the incredible market action – both in the U.S. and around the world. Many countries and almost all sectors have suffered, as the ripple effect from the battered American stock market spreads across the globe.

That includes investments that typically have little correlation to stocks. Like commodities…

Commodities Crushed

Every area of the commodities arena has taken a hit, some of which have absorbed multiple blows.

When the stock market falls, we usually see some sort of upward bump in physical assets, as investors flock to so-called “safe havens.” It’s part of the “rolling” process out of one market (in this case, stocks) and into another commodities.

But not this time. The only commodities that have seen any kind of climb lately are gold and silver – the most traditional safe havens. But both metals also suffered nasty selloffs in the weeks prior to this latest round of stock market turmoil.

Metals Outshine

Scan your eyes across the commodities sector and you’ll see that silver and gold are currently the only commodities not getting whacked. At least as badly as everything else anyway.

Gold has held up pretty well, still trading above the lows it made back on September 11. In times of turmoil, gold is usually the asset of choice. But when everyone is selling across the board, even stable assets like gold can stay suppressed.

As for silver, although it’s performed weaker than gold, it’s still trading above its September lows, too. If the stock market starts to turn around and the U.S. dollar moves lower, we should see the metals pop up even more.

Oil Suffering From Financial Fallout

As always, the energy market tends to dominate the commodity sector. When I last wrote to you two weeks ago, crude oil futures had rallied almost $20 a barrel – from near $90 to the recent high of $110.

But not surprisingly, the story has changed again, and oil has dropped all the way back down, even trading as low as $87.56 a barrel on Monday for the front-month futures contract.

Talk about volatility! That’s a $20,000 move in equity on the way up and the same amount going right back down. Hope you like Tums! There’s no doubt we’ll continue to see this massive volatility.

With that in mind, if you’re brave enough to play this market right now, stick with limited-risk option strategies.

Natural Gas Takes Its Cue From Oil

Natural gas looked like it had been building a base of support after its long slide downward since July 2008.

But like its fellow commodities, the market hasn’t been able to stand up against a wave of selling. As you can see on the chart, the front-month futures contract is now below $7 per mmbtu – a level it hasn’t seen since the beginning of the year.

We’re seeing this type of activity in a lot of markets now, where the gains for the year get totally wiped in just a few short weeks in some markets. As with crude oil, natural gas will be part of the volatility and likely to continue to see large moves.

I’ve seen more volatility in recent weeks than I have in my entire 17 years of trading. It’s a rough ride that makes the trading environment very difficult. But try to keep a cool head and avoid panicking until the dust clears. It’ll pay off in the end.

Source: Stock Market Massacre Trickles Down To Commodities… But These Two Are Holding Up Well