The Commodity Calm: Prime Time to Load Up Before the Storm?

The markets are eerily quiet right now, but beneath the surface, the tectonic plates of commodities are shifting. Silver is flirting with 13-year highs, Brent crude is dancing near $80, and grains are staging a weather-fueled comeback—all while the Federal Reserve holds rates steady but hints at cuts ahead. This isn't a pause for breath; it's a strategic moment to position yourself before the storm breaks. Let's dive into the data and decide where to strike.

Silver: The Undervalued Catalyst

Silver's recent retreat from $37 to $35 has created a buying opportunity. The Fed's “wait-and-see” stance on rate cuts has cooled some inflationary fears, but the long-term fundamentals are bullish. With the Fed's dot plot predicting two cuts by year-end and global central banks ramping up gold purchases, silver's industrial and monetary demand is primed to surge.

The COT report reveals a fascinating dynamic: managed money traders have been trimming shorts, signaling a shift toward bullish bets. Meanwhile, platinum's stalled move toward its 2021 high at $1,340 suggests silver could lead the next leg upward.

Action: Accumulate physical silver or the iShares Silver Trust (SLV). The $35 level is a floor—break it, and you'll know to bail. But hold? That's where the fireworks start.

Energy: The Strait of Hormuz Wild Card

Brent crude is perched at $78, just below the $80 resistance mark. The Israel-Iran conflict isn't going away, and every flare-up adds a $10 “risk premium” to crude prices. OPEC+ is producing at full throttle, but if a single tanker is hit in the Strait of Hormuz, that premium could spike to $20—and send oil to $100.

The COT data here is telling: swap dealers are hedging aggressively, while managed money is piling into long positions. This isn't a bet on fundamentals—it's a play on geopolitics.

Action: Use options to lock in gains. A vertical spread around $80 gives you exposure to a breakout without unlimited risk. If you're all-in, the United States Oil Fund (USO) remains the go-to proxy—but keep an eye on contango.

Grains: The Weather Trade to Watch

Grains are the quietest sector now, but they're also the most volatile. Wheat hit a two-month high this month on Russian export cuts and North African demand, while corn and soybeans lurk near critical support. The USDA's crop ratings are strong, but summer heat could wilt that optimism.

COT data shows managed money reducing shorts, but this rally is still technical—driven by short-covering, not fundamentals. That means a single drought report or export disruption could send prices soaring.

Action: Wheat looks strongest—buy the Teucrium Wheat Fund (WEAT) or wait for a dip below $8.50 to load up. For soybeans, patience is key; wait for the USDA's August report before pulling the trigger.

The Macro Backdrop: Dollar Weakness and Fed Cuts

The Fed's “lower for longer” stance is a gift to commodities. A weaker dollar makes everything from cocoa to copper cheaper abroad, boosting global demand. Even if inflation stays sticky at 3%, two rate cuts by year-end will flood markets with liquidity—exactly what commodities crave.

Final Call: This isn't a “buy-and-hold” moment. Use the calm to layer into positions. Silver for the long game, energy for the geopolitical pop, and grains for the weather whiplash. When the Fed finally cuts, or Iran blows up a tanker, you'll be ready to ride the storm.

Stay aggressive, stay smart—and stay ahead of the curve.

—The Mad Trader