Guns, Gold, and Another Commodity Crash…

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I was going to talk about guns today…

After flipping through my charts Wednesday morning, I was all set to walk you through the record number of Black Friday FBI background checks for firearm purchases and the fact that shooting tragedies tend to play a role in stoking big gun sales.

This year, we had to deal with a shootout at a Planned Parenthood office in Colorado on this Black Friday. And it’s no coincidence that the previous all-time high for background checks came on December 21, 2012. That was just days after the Sandy Hook shootings…

That’s the fear factor at work.

People are terrified about the violent crime they see on the evening news. They want to protect their families. And yes, they want to buy guns to do it. Every incident of gun violence not only stokes these fears, but also the fears of those worried that the government is just moments away from hammering out new restrictions on firearms and ammunition. Consequently, these fears have resulted in big sales for the gun manufacturers.

So like I said, today I was going to highlight the charts of Smith & Wesson Holding Corp. (NASDAQ:SWHC) and Sturm Ruger & Co. (NYSE:RGR). But yesterday’s incident in California derailed these plans…

But to be perfectly honest, I just don’t have the stomach for any more gun talk the morning after 14 people were killed in San Bernardino. Are we going to see more record background check numbers after yesterday’s tragedy? I’d be shocked if we didn’t. But I’ll leave it at that. No lectures. No insight. When it comes to the violence we witnessed yesterday, I don’t have any answers for you.

So instead of dwelling on guns today, let’s talk about gold. And oil. Heck, commodities are crashing everywhere you look. Pull up almost any chart and you’ll see they’re all headed for multi-year lows.

Yesterday’s action was especially bad…

Crude looks ready to slip through its August lows at it flirts with $40 once again. And gold futures are smashing below $1,050 this morning for the first time since 2009. I took an informal poll on Twitter yesterday asking what will happen first: $35 crude or $999 gold. Can you imagine how people would react if they saw that question a few years ago? They’d lose their damn minds.

Yet here we are…

Crumbling Commodities

Of course, oil and gold aren’t the only victims in the great commodity unwind. Natural gas is teetering on another big breakdown. Copper is barely clinging to $2. And silver is sneaking below $14 this morning.

I know it’s probably tempting to try and play a snapback rally here. But your best course of action right now is to steer clear of these troubled commodities. More pain and suffering are probably on the way.

Even the miners can’t grab anything remotely close to a bounce. Just look at a chart of Freeport-McMoRan Inc. (NYSE:FCX):


FCX is just about 10 cents away from its August lows early this morning. A small drop here will probably trigger even more selling.

2015 has been a brutal year for commodities. And it will probably get worse before it gets better. Get ready for lower prices…


Greg Guenthner
for The Daily Reckoning

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