Can the Commodity ETF Hot Streak Last?

This year has been a good one for commodities and related ETFs, though some say that the rise of commodity prices may have been a little too fast.

Copper started the week with a new year high and brokers are uncertain as to the cause, reports Andrea Hotter for The Wall Street Journal. Market fundamentals aren’t supporting any strong price gains at the moment. Copper did receive a boost yesterday after the factory orders report.

• iPath DJ AIG Copper TR Sub-Idx ETN (NYSEArca: JJC): up 107.8% year-to-date

The U.S. Commodity Futures Trading Commission Commitments of Traders report revealed that speculative long positions have hit a high last seen in the beginning of 2006, which means downside risk is accumulating, and the current commodities market is still bullish. Experts and analysts are divided as to how prices will pan out.

• iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG): up 10% year-to-date

China is the largest holder of U.S. debt, with around $1 trillion, and experts are urging China to diversify its currency holdings unless the country enjoys watching its dollar holdings depreciate in value, remarks Andrew Snyder for Today’s Finance News. Another option for China is to exchange some dollars for commodity holdings as a better way to hold value – also, better for commodities investors gazing at those price upticks.

• PowerShares DB U.S. Dollar Index Bearish (NYSEArca: UDN): up 7.4% year-to-date

Natural gas inventories are almost topped off with a little more than 3.7 trillion cubic feet – the total country storage space is 3.9 trillion cubic feet. Snyder believes the natural gas market has ridden the commodities bubble and a correction may soon take place as the spot market corrects for the excess inventory.

• United States Natural Gas (NYSEArca: UNG): down 57% year-to-date

Keep in mind that these are just predictions. Watch the markets for what really happens, and act accordingly. When investing in commodities, it’s wise to have an exit strategy that involves a stop-loss points that you can execute when the time comes.

Max Chen contributed to this article.

Comments

[Mad Hedge F...:]

kue Those of you searching for the “newnormal” better take a close look at the China National Offshore OilCompany’s (CNOC) efforts to top Exxon Mobil’s (XOM) $4 billion bid fordevelopment rights to a giant new field off West Africa. This is onlythe latest chapter in a global bidding war for essential resourcesthey, and we, need. Long gone is the day when the Standard Oil Companyonly needed to deliver King Saud a new Cadillac every year to assurerights to his kingdom’s oil supplies, even though it often had to betowed by teams of camels, as there was no refining capacity yet on thepeninsula. Decades later, I was part of a SWAT team at Morgan Stanleywhose schmoozing kept the crude flowing and the cash surplusesrecycling. Having grown up in the desert near Indio, California, I wasthe only one in the company who actually liked caravanning out into thedesert to scoop up cooked rice with my fingers off of giant brassplatters, and guzzle illicit Johnny Walker Red, said to be smuggled inby a wayward member of the royal family. I never did get used to thesheep brains, though. But I digress. To the current generation of oiltraders, I might as well be talking about the Pax Romana than the PaxAmericana, which is now equally ancient history. The hard truth is thatthey are out there bidding against the new 800 pound gorilla in themarket, as are others for coal, iron ore, copper, gold, silver, wheat,corn, soybeans, and myriad other essentials. If you have any doubtsabout China’s acquisitive determination, look at the chart belowshowing that the Middle Kingdom’s outbound direct investment isoutstripping inbound investment for the first time. Will the PebbleBeach Golf Course next? For you and I, this means we can count on theprice of everything to go up in the future, a lot. Keep food,commodity, and energy ETF’s permanently on your radar, like thePowerShares agricultural (DBA), the Rogers International Commodities(RJI), and the Oil Trust (USO). Jim Rogers, are you listening?

Nov 05 09:31 AM

[Michael Clark:]

BAL, Cotton ETF, ready to take off. See chart below:

seekingalpha.com/insta...

Nov 05 09:51 AM