June 06, 2008 at 3:00 pm by Tom Lydon
A closer look at the coal oriented exchange traded fund (ETF) tells us that the fund really is a bag of coal. Market Vectors Coal ETF (KOL) is a basket of 39 coal-related companies that are spread across 12 different countries, reports Steve Halpern for Blogging Stocks.
While coal is known for its sooty footprints left behind, the world uses coal for 25% of its energy, while generating half the electricity in every state in the U.S. besides California. The price of coal has been soaring, as it is responsible for 70% of global steel production, of which is also booming.
Basically, demand is fueling the coal trend, and countries like South Africa and China rely on coal for their main energy source. Even eastern Europe is dependent on coal. Meanwhile, supply distributions are interrupted, as China has shut down mines due to the massive earthquake, with reports indicating the country is down to a 12-day supply.
China will also shut down the coal factories anywhere within a 125 mile perimeter of the Olympics in Beijing, out of respect for the athletes, to reduce pollution, emissions and smog.
