Saturday, December 25, 2010
From a big picture perspective, the iPath Dow Jones-UBS Commodity Index ETN (DJP) is up almost 13% year to date. DJP holds a basket of 19 commodities weighted on market prices.
But DJP doesn’t do justice to the year we’re seeing in commodities.
In fact, a handful of individual commodities are having unbelievable years. Cotton is the year’s biggest winner, up a ridiculous 104% year to date. Some other headline grabbers are silver, up an amazing 74%, and corn, up a stellar 46%.
And those are just some of the flashy winners. There are over 15 major commodities with greater than 20% gains this year! That’s crazy.
No matter how you look at it, it’s been an incredible year for commodity investors.
Here’s the thing…
We’re just scratching the surface of where commodities can go. (more)
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There are several other ETFs that track the shares of oil and gas producers and services companies, although those other ETFs do not experience the same magnitude of trading volume as the XLE and OIH ETFs.
The XLE ETF tracks the shares of U.S. large-cap oil and gas companies with recent trading volume about 10 to 20 million units per day. This ETF has a heavy weighting of Exxon Mobil Corp. (XOM-NYSE, $72.80), which significantly influences the direction of the ETF. Since XOM has lagged the XLE ETF during the last several months the recent influence has been a drag on the ETF’s performance.
The OIH ETF tracks the Philadelphia Oil Services Index (OSX, 242.22), which is comprised of the shares of U.S. large-cap oil and gas service companies. Recent trading volume is about 4 to 5 million units per day. This ETF includes oil and gas service companies such as Schlumberger Ltd. (SLB-NYSE, $82.81), Halliburton Co. (HAL-NYSE, $40.41) and Baker Hughes, Inc. (BHI-NYSE, $56.76), which have all outperformed the OIH ETF since Sept. 1. (more)
For all those who watched the historic CFTC meeting December 16th on position limits, no, your eyes didn’t deceive you – the meeting ended strangely and abruptly. No vote was taken on the staff’s proposal and you should be scratching your head at what actually transpired. As strange as the sudden adjournment to the most important meeting in CFTC history might be, there was a wealth of knowledge and confirmation to be drawn from it. This meeting was perhaps the most significant and positive development towards ending the long-term silver manipulation that I have witnessed in my 25 year involvement. Silver investors should come away from this meeting with a strong conviction of how things will turn out.
I know there are deep differences between the five commissioners on the matter of position limits, even though such limits are now mandated by law. I know that the CME Group (COMEX and NYMEX) is pulling out all stops to prevent, delay and water down any position limits that may be enacted. But I also know that there is one glaring truth that accounts for the dissention and turmoil revealed at the meeting. This is all about silver and its manipulation. If it weren’t for silver, this meeting and the issue of position limits would be a non-event. There is no current concentration problem in any other commodity.
Because of the fact that silver has been manipulated in price and position limits would terminate that manipulation, the CME and JPMorgan want to derail any move towards these limits. Keep this fact in mind, as it is the central issue. When it comes to market regulation and silver the CME Group does not do the right thing. They are only interested in their bottom line and the devil with everyone else. However, the CME is designated as a self-regulatory organization by law, which means they have special responsibilities as a front line defense against market wrongdoing. (more)