Commodities performed well yesterday, powering our portfolio to a 4.5%+ day. Those days do not come enough, and we are thankful for the times they do occur. We will be moving money around in the coming weeks, as we want to gain leverage to a few plays. This will all hinge upon the options market, so we will make no moves until that market gives us the all clear, and the price is right on the calls we want.
We will have crude inventories out today, and those numbers are always capable of moving markets. We do not expect fireworks today, but we have been wrong before. Looking at our equities, we saw Kodiak Oil & Gas (NYSE:KOG) up strongly in early trading yesterday until it backed off at the end of the day. As we say, up is up and for that one can hardly complain.
We are liking Gulfport Energy (NASDAQ:GPOR) more and more. It never got down below the $30/share level we wanted in order to buy even more, but the pullbacks have been nice accumulating areas. We think the company may be fully funded until it gets its joint venture partner in the Utica, which is good news for investors as it will keep them from being diluted further.
Chesapeake Energy (NYSE:CHK) and its partners, among them EV Energy Partners, LP (NASDAQ:EVEP), will build a $900 million mid-stream complex in Eastern Ohio. This is a big investment for the area and a rebirth of sorts for the manufacturing heartland of America. We think this only shows the great promise of the Utica in Ohio and is extremely bullish news going forward.
The complex will process natural gas and natural gas liquids and the surrounding area is rich in dry gas and wet gas. This will be the largest such facility in Ohio, but we imagine that as the play continues to be developed that this will merely be the first of many. Drilling will ramp up as 2012 draws to a close and investors should have a better grasp on the results, however these are the players who have the most knowledge of the area, and the fact they are making large capital investments now should demonstrate the success of the young play.
Gold & Silver
Gold has seriously broken down over the past 12 hours or so, falling $40/ounce down to the $1660/ounce level. The speech in China most likely did not help, but it appears that the bears may have won this round with the bulls. We are still holding our physical lots for long-term trading purposes but realize that short-term we have some issues facing us.
Silver too is down, having fallen below $33/ounce before rebounding strongly. There is not much to add to that today, except that as the economy rebounds so too shall silver.
Tomorrow we will look at rare earths and the issues in that market, but we want to point out today that Molycorp (MCP) is still looking strong and has carried the rest of the industry lately. Buyouts have a tendency to do that, and as risk-on slowly trickles into the sector, the equities will rise higher.