PowerShares DB Base Metals Fund (NYSE: DBB) — Commodities should generally outperform the market in 2011, with industrial-use metals leading the group. Since DBB is the largest fund composed of futures contracts on some of the most widely used metals, such as aluminum, zinc and copper, it is a candidate for a powerful move higher in the new year.
Where gold has risen as a safe haven priced only on investor demand, base metals are priced on a combination of investor demand and industrial use.
For example, the market for copper is very tight with a flat supply and increasing demand from China, Europe and the United States. The price of copper has risen about 50% in the past six months, and according to industry analysts, there is no top in sight.
Buy DBB now and hold. The long-term price objective for this ETF is $30-plus.
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