Trade of the Day: Sibanye Gold Ltd (ADR) (SBGL)

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Interest rates continue to stay very low, with the 10-Year Treasury hitting levels around 2.1% last month, while negative interest rates have been around in Europe for five years.

I have been doing some research on this topic, and that has led me to believe that one of the reasons is the effects of global warming. Because temperatures have been warmer recently than they have been in the past, this is causing an agricultural boom, which is keeping commodity prices really low.

Now, higher interest rates are a result of inflation, but we’re not seeing a lot of inflation, and I believe one of the reasons for that is that we can produce food at a much lower cost. That is basically acting as a depressant to inflation, and therefore it is having the effect of keeping interest rates low.

Another reason we’re not seeing much inflation is due to the dramatic increases in technology in many different sectors. Looking at the oil industry, for example, oil prices have been kept down due to the advances in fracking technology and other advances in the oil and natural gas space. Furthermore, the so-called “sharing economy” — services like Lyft, Uber and AirBNB — is also reducing costs for many people around the world. All of these factors are causing inflation to stay down, which, in turn, are causing interest rates to stay down.

This is a great environment for miners, and today I’m recommending a bullish play on gold and platinum miner Sibanye Gold Ltd (ADR) (NYSE:SBGL):

Buy to open the SBGL Jan. 19th $5 call at about $0.70.

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Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.

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