It turned out to be another wild day on Wall Street. The equities market managed to hang on to most of its big gains from yesterday and is now on the cusp of a bullish streak. But even better than the equities market today was the commodities sector.

The prices of oil, gold, silver, coal, cocoa, natural gas and the rest of the gang were up today thanks to some key rate cuts across the globe. China and the United States cut their short-term lending targets and it appears that Japan may follow suit.

Rate cuts mean there is an increased chance of a boost in economic activity and that means commodities traders have a reason to increase prices.

Crude prices surged by nearly 10% today on news that energy supplies decreased faster than expected over the last week. Experts were expecting inventories to surge by as much as 1.5 million barrels, but the weekly government report showed an increase of just 500,000 barrels. That means demand has not slipped as much as traders anticipated.

Some strong profits

For energy investors, today’s commodities increases come as good news. For the folks that followed my advice from earlier in the week and invested in James River Coal (NASDAQ:JRCC), the rise in coal prices is fantastic news. Your positions should be up as much as 28%. Those are fantastic profits in just two days.

Over the next few weeks and months were will experience a bit of a dichotomy in energy prices. The price of crude will continue on its longer-term trend towards $50 per barrel as global demand falters. But commodities like coal that do not see such wide swings in demand will work towards higher prices, making investors in companies like James River plenty of profits.

Finally, the price of gold jumped by nearly $20 today. That means investors are beginning to realize that the Fed’s recent monetary policy changes will greatly increase dollar liquidity. Gold prices will continue to rise over the short-term.

The market is beginning to settle down and trading opportunities are cropping up all over the place. I am quite excited about the action on the commodities market today. While some of the price gains will certainly reverse, the news proves that the doom-and-gloom sentiment is changing.

The next few weeks will be great to savvy investors.

Source: Commodities mini-rally hands us big gains in James River Coal (JRCC)

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