The Commodity ETFs in focus
December 17, 2008
– Comments (4)
Relative performance of commodity ETFs over last 3 months
There are the following ETFs on a comparitive 3-month chart, in order of appearence from top to bottom:
GDX - gold miners equity ETF
MOO - agribusiness equity ETF
PXI - energy equity ETF
HAP - Jim Rogers Hard Asset equity index ETF
SLX - steel equity ETF
KOL - coal equity ETF
I post this chart not to recommend any given ETF (since I think Fools can perform better with careful stock selection), but merely to offer food for thought as Fools might be looking to step into an already-hot commodity rally. Gold and agriculture stocks have come out strong in the early going, suggesting to me, anyway, that relative opportunities may exist in steel and coal. To the extent that the dollar continues this steep decline, all commodities are likely to rally. Any forestalling of the present rally will be predicated upon a pause or momentary relief rally in the dollar's steep decline.
According to the most knowledgeable gold trader I know of, Mr. Dan Norcini:
"Today’s action in nearly every single market that trades can best be described by one phrase – “It’s all about the Fed”. Their decision to basically print as much money as needed to liquefy the financial system is a signal that the Dollar be damned as far as they are concerned. They will create as many of those little green things as they feel is necessary to free up the logjam in the credit markets. The Forex markets wasted no time whatsoever in administering a sound “arse whooping” to the greenback as it has utterly collapsed...
The only question in my mind at this point is exactly how fast the monetary authorities are prepared to let the dollar fall since it is no longer a matter of “IF” it will fall – they want it down. No one is going to want the dollar to drop off the face of the earth – what they ideally want is a “controlled descent” if such a thing is possible now that any fundamental support beneath the dollar has been eliminated."
All views and ideas welcome as always!
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