The Underlying Mood of Commodities

 |  Includes: DBC, DJP, GSG
by: Thomas MacLeod

The big three commodities, gold, silver and crude, have been suffering a bit lately. We can see that the big commodity ETFs (like DBC, DJP, GSG) are experiencing similar downturns.

Interestingly, the spot prices of commodities are trading at multi-week highs, as can be seen from our propriety index constructed from the spot price of commodities used in quantity across many industries (polyethylene or plastics, coal, wool, pulp, & rubber). The commodities measured here are not so susceptible to speculative activities.We have long felt that the futures market for commodities is heavily manipulated and hides the true behaviour of the commodity market in general.

Here we present firstly our commodity index, then the ETF DBC for your comparison. [click to enlarge]

Click to enlarge
Click to enlargeJust one simple comparision - but it may help others understand a little more about why we remain firmly in the bullish camp with respect to commodity prices.

"All human wisdom is summed up in two words - wait and hope" - Alexander Dumas, père

Although the great man was not one of the world's greatest mathematicians, his words do sum up life as a trend trader.

Disclosure: Long DBC SLV TBT