By: Billy Fisher

Contributor, Stock Traders Daily -  Rule-Based Trading Strategies

(La Jolla, CA) Now that the government has begun to infuse trillions of dollars into the economy in the form of stimulus efforts, it should come of little surprise that inflationary concerns are beginning to creep up. But are these fears of hyperinflation overdone?

In a recent report titled The Grimm Reaper is Knocking, Thomas Kee issued comments about inflation, the economy, and the stock market.  Interested readers can obtain copies of this report through Reuters, or use the instructions below.

In recent trading sessions, Treasury prices have continued to fall as yields push their way back towards their highs for the year. The iShares Barclays 20+ Year Treasury Bond Fund (NYSE: TLT –Trading Report) now has a yield that sits above 4%. TLT taken together with the UltraShort 20+ Treasury ProShares Fund (NYSE: TBT –Trading Report), which seeks to deliver a return that corresponds to twice the inverse of the daily performance of the Lehman Brothers 20+ Year U.S. Treasury index, make for endless trading opportunities in this area regardless of your sentiment.

Thomas H. Kee Jr., president and CEO of Stock Traders Daily, notes that the current trend of falling Treasury prices could prove to be a trap for investors. “The cost of money is going up,” he wrote in a recent report to clients. “Treasury yields will be increasing soon. When that happens, all of the funds invested in U.S. Treasuries will be stuck.”

The notion that commodities have continued to surge is additional evidence that investors might be looking to hedge themselves against the prospects of future inflation. The United States Oil Fund ETF (NYSE: USO –Trading Report) has surged 73.1% since late February despite multi-year high levels of crude inventory. Precious metals have also been standing strong. The SPDR Gold Shares ETF (NYSE: GLD –Trading Report) and the iShares Silver Trust (NYSE: SLV –Trading Report) both are presently holding steady near their 2009 highs.

The spike in commodity prices is of little surprise to Kee. “I expect inflation to be a major concern as 2009 ends,” he wrote. “I expect increased prices for commodities and for the basic goods and services we use every day.” 

Generally speaking, Kee does not expect inflation to remain a major concern over a longer time horizon though. “I do not foresee inflation as a major problem long-term unless it is commodities driven based on global demand,” he wrote. “For now, I do not expect inflation to be long – lived, but I expect it to look serious as 2009 ends.”

Regardless of how and when the inflation theme ultimately plays itself out, there are bound to be an array of short-term opportunities tied in to this idea that can be had by the proactive trader.

Kee has provided a report in which he details the current economy and the probabilities for future economic growth or contraction.  The quotes here come from that report.  Readers can obtain a copy by logging in, and reviewing the most recent entry in the Investment Rate tab.  The Investment Rate is the most accurate leading longer term stock market and economic indicator ever developed, according to Kee.

Looking to make your own commodity trades? Check out dynamic real-time trading reports published by Stock Traders Daily CEO, Tom Kee Jr., with a Free Trial.

In 2008, Kee’s Stock of the Week selections returned 60.8%.