Although they've given back a bit of ground lately, commodity prices have performed well during the past year. Since last February, the benchmark Reuters/Jefferies CRB Index has gained 21.8%, aided in particular by strength in agricultural, energy and precious metals-related products.
One group of commodities, base (or industrial) metals -- which includes aluminum, zinc and copper -- has not kept pace with the others, however. Over the past twelve months, the Deutsche Bank Liquid Commodity Index-Optimum Yield Industrial Metals Excess Return Index -- which has an exchange-traded fund, the PowerShares DB Base Metals Fund ETF (AMEX: DBB) -- has only risen 2.1%.
Among the reasons for the lagging performance have been worries over softer demand amid a slowing U.S. economy and abundant supplies stemming from output boosts in China and elsewhere. Even so, based on recent price action, it appears that at least some of this bad news is already being factored in.
In fact, on an absolute basis and relative to the CRB, the Base Metals Fund ETF has broken key medium-term downtrends and appears to have traced out a tradeable bottom. For those who believe that owning commodities is the way to go, the positive technical picture suggests the near-term focus should be on the industrial metals.
Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.
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Reader Comments (Page 1 of 1)
2-04-2008 @ 7:15PM
Michael Schneider said...
Investment legend and commodity superbull Jim Rogers recently said he is "watching base metals closely". He likes uranium now among the metals and says he wouldn't be buying platinum at these levels. See the newest item in Channeling Jim Rogers (yellow label, top) at http://www.Barrelomoney.com.