Commodities ETFs: The Time Is Not Yet Ripe

After the free-fall this year, could it be time to buy commodity exchange traded funds again?

On average, the typical diversified natural resources fund has bombed out on average of 56% this year, taking away any gains made since 2005, says Eric Roseman for MoneyShow.

Commodities, and the funds that tracked them, were the summer of 2008’s little darlings, with oil, base metals and soft commodities in huge demand. The recent losses are tremendous, leaving many investors wondering if this is the time to get back into the sector. Commodities guru Jim Rogers doesn’t think they’re done.

Roseman suggests that if world markets begin to tally and post gains, then commodities will follow due to their need for liquidity.

A gradual re-entry into commodities could be on the horizon, set up for the long term. Just be sure to have a strategy in place when you decide to re-enter the market, and watch for the 50 day moving average for a starting point. Right now, the trend for commodities is not there. Wait until it is before considering whether they’re right for you.

• GreenHaven Continuous Commodity Index (GCC): down 31.4% since January 2008 inception

• PowerShares DB Commodity Index Tracking Fund (DBC): down 36.6% year-to-date

Comments

[bigmoney:]

I recently purchased some energy / materials stock ETFs, to diversify some of my cash, as an inflation hedge.

2008 Dec 27 12:36 PM

[mlkr:]

which ones please?

2008 Dec 27 12:56 PM

[D. McHattie:]

I appreciate that you've taken the time to author this article but are you really suggesting that we attempt to time the exact bottom of all commodities before investing in, say, gold or oil?

While it may be true that commodities, in general, are still in decline, I feel this should not dissuade investors from considering a position in some specific commodities.

Jim Rogers is not selling - he is buying agriculture and he is buying it now.

2008 Dec 27 01:59 PM

[GloomBoom.com:]

Buy commodities now! You won't be sorry. They aren't making any more of them.

2008 Dec 27 03:22 PM