Seeking Alpha

Kevin Grewal's  Instablog

Kevin Grewal
Send Message
Kevin Grewal is the founder, editor and publisher of ETF Tutor as well as serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent... More
My company:
ETF Tutor
My blog:
ETF Tutor
  • Metals ETFs Likely to Luster 0 comments
    Jan 15, 2010 9:07 AM | about stocks: XLB, IYM, DBB, AA
    By Kevin Grewal
    As earnings season is in full swing, Alcoa (NYSE:AA) disappointed Wall Street, but increased demand from the global manufacturing sector will likely support base metal prices in the near future. 
    Elastic demand in base metals is primarily driven by the manufacturing sector and the manufacturing sector generally grows as economies emerge out of a recession. So, the demand for base metals will likely increase as economies around the world grow. 
    In fact, the most recent manufacturing numbers suggest that two of the largest economies in the world, China and the United States, are showing strong signs of growth. China’s manufacturing index posted a 55.9 in December suggesting expansion and the number of manufacturing mills that are increasing utilization rates is on the increase in the United States.
    Demand from other regions of the world including parts of Latin America, Russia and other Asian nations like India, is expected to further bolster demand for base metals due to their uses in infrastructure and their direct correlation with growth in middle classes. As middle classes grow, which is expected to be seen in developing nations, demand for automobiles, real estate and other assets which utilize base metals generally follows.
    In a nutshell, the expected increases in demand of base metals will likely support prices which will affect the following ETFs:
    ·         the Materials Select Sector SPDR (NYSEARCA:XLB), which closed at $34.05 on Thursday
    ·         the iShares Dow Jones Basic Materials (NYSEARCA:IYM), which closed at $62.70 on Thursday
    ·         the PowerShares DB Base Metals (NYSEARCA:DBB), which closed at $22.82 yesterday.
    When investing in these equities, it is important to consider factors that could potentially hinder the price of base metals like a hiccup in China’s economic growth.   A good to way to protect against these factors as well as the inherent risks involved with investing in equities, is through the use and implementation if an exit strategy which triggers price points at which an upward trend in gold could potentially be coming to an end. 
    According to the latest data at www.SmartStops.net, the price points for the aforementioned ETFs are: XLB at $32.92; IYM at $61.29; DBB at $22.27. These price points fluctuate on a daily basis and reflect changes in market conditions. Updated data can be found at www.SmartStops.net.


    Disclosure: No Positions
Back To Kevin Grewal's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.