Resource stocks have advanced significantly since February. Is this a sign of things to come, or is it a head fake? The push into commodities over the past few weeks may well be more a hot-money momentum play than any preliminary indication of a sustainable rally. Fears of climbing inflation as a result of massive central bank quantitative easing efforts have contributed to this price surge in “real” assets as both inflation hedges and safe harbours.

It’s not hard to see where such fears originate. Check out any chart that measures the growth in the US monetary base – the total money in circulation. The increase since last September has been nothing short of astounding, as the Fed has nearly doubled the size of its balance sheet. And as one might expect, the price of gold has followed a coincident uptrend in the same period, climbing 35% from its low around US$740 per ounce back to nearly US$1,000 in February, to level off last week at US$955.

But unless all that quantitative easing results in a return to real economic growth sooner rather than later, demand for commodities is likely to remain weak across the board. Suggesting that the current rally may be overplayed and could present options traders with a bearish opportunity in the near term.

Traders might want to look at buying April puts on broad optionable index ETFs such as the iShares CDN Materials Index Fund (TSX: XMA, Friday’s close $14.10). Say the April 14 puts at 60 cents.