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The US Dollar, Gold and Aluminum

Mar 19 2009

The US Dollar, Gold and Aluminum

Late Wednesday the Federal Reserve put in place a plan to add $1 trillion dollars to the US economy to help consumer and small business lending in addition to buying long-term government bonds. The recent action of the government helped boost the markets Wednesday but has led to a quick downturn in the US Dollar and strength in commodities traded in dollars.

US Dollar - Powershares US Dollar Index Bearish (UDN)

You can play the US Dollar downturn with the Powershares US Dollar Index Bearish ETF (UDN). This fund moves in the opposite direction of the US Dollar. The ETF is up 1.2% today and has broken out of a tight range in the beginning of March to rally from $24.5 a share to it's current level of $25.5. The ETF does not make quick moves with large percentage gains but is a more conservative investment for a longer term hold.

Gold and Aluminum - SPDR Gold Shares (GLD) and IPath DJ AIG Aluminum (JJU)

With the dollar moving lower, commodities trading in the dollar are moving higher including oil, gold, and aluminum. Gold can be played with the SPDR Gold Shares ETF (GLD). While aluminum can be played with the IPath DJ AIG Aluminum (JJU). GLD is up 1.35% today to $94.40 a share, just starting to break out forming a double bottom and signaling a buy at $91.30 a share. JJU is lightly traded so would be a less viable trade but has a similar breakout as gold moving above $20.51 a share recently.

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