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Other than the occasional lump at Christmas, most of us don't give a thought to coal. It's not sexy like a windmill. It doesn't have the glow of nuclear.

Yet, coal represents nearly a third of total global energy supply, just behind oil. Thermal coal is used to generate more electricity, 40%, than any other fuel source. Metallurgical coal is vital in steel production. And while oil production has stagnated over the last five years, coal production is up 20%. Nor is coal going away. The International Energy Agency says that even under the most plausible global greenhouse gas agreement, coal will still be a big piece of the energy pie.

So it makes sense to have some pure coal exposure and this Market Vectors Coal ETF (NYSEARCA:KOL) is the only one that offers it. Launched just two years ago, this ETF invests in 38 coal-related companies. Half of its weight is in US companies, with another 20% and 12% in China and Indonesia respectively.

With the close link to electricity and steel, coal prices are a leading indicator of economic activity. As a result, this ETF's price movement tends to be an exaggerated version of the stock market. From the lows of May 2010, the ETF has rallied by 60% versus about 20% for both the S&P 500 and OIL, a popular crude oil ETF.

Its higher volatility means KOL is not appropriate as a core strategic holding. But it is one of archerETF's preferred ETFs for short-term tactical positions in our client's portfolios.

(For the one-page PDF version of this report, click here.)

Disclosure: No position