Solar ETFs Glimmer With The Help Of High Oil Prices

Solar exchange traded funds (ETFs) appear to be basking in the sun as ever-rising energy prices are sending people looking for less expensive alternatives.

Two companies of interest are JA Solar (JASO) and Evergreen Solar (ESLR) who have experienced high first-quarter earnings. Market Vectors Solar (KWT) and Claymore/MAC Global Solar Energy (TAN) are up 7.7% and 9.5% respectively so far this week, reports Rob Wherry for Smart Money.

Both funds are still new kids on the block: KWT was launched on April 23, and it's up 4.6% since then. TAN was the first solar ETF available, launching on April 15. Since then, it's up 10.9%.

Will the flood of investors driven to solar continue, even if oil prices retreat? Time will tell. Oil futures fell today, settling at $122.20 a barrel. It's the weakest level since May 8, say Myra P. Saefong and Polya Lesova for Market Watch. Natural gas prices also fell by 3% after a bigger-than-expected jump in supplies was reported.

Protect Your ETF Portfolio If That Boom Goes Bust

When a particular "boom" goes "bust", what should investors do with their related exchange traded funds (ETFs)?

Gary Gordon for ETF Expert takes us back to 2000: the dot-com bulls were running rampant, convinced that the stock prices for those companies could do nothing but soar. In more recent years, the same craze spread through the real estate markets: the world is getting more crowded, there are fewer places to build and it can only send prices higher.

We all know very well by now how that turned out. But Gordon says that this isn't necessarily to suggest that the newest booming sector - commodities - is primed for a fall. But he does stress that investors should recognize the psychology of fear and greed.

It's a fact: booms go bust. Therefore, investors need to have a plan to sell.

Some resource ETFs are particularly attractive now, to be sure. Food is scarce. Water is scarce. Oil seems like it can't be stopped. Naturally, investors will be taking a look at such funds as S&P Metals and Mining (XME) or the PowerShares Water Resources Fund (PHO).

It's okay to get in those areas that are moving and above their trendlines. What's not okay is hanging on as it falls below that line or 8% off its high and hoping against hope that things will turn around.

Now that consumer spending is at a stand still and real estate investment trusts are unattractive, what do savvy investors do? They bargain hunt! There are values to be had if you look for them. For instance, the Vanguard REIT Index (VNQ) is above its long-term trendline and has outperformed the broader market for 2008. The Retail HOLDRs (RTH) has followed suit, sitting above its trendline.

For full disclosure, Tom Lydon's clients own shares of RTH.

Oil Futures ETFs Aren't the Only Ones Affected As the Price Moves

The retreat of oil service-focused exchange traded funds (ETFs) yesterday was a reminder for investors to not get so hung up on the price of oil that they ignore all else.

While funds such as United States Oil (USO) undoubtedly benefit from the rising prices, other funds feel the affects whether prices go up or down, too, so be sure to look around if oil pulls back and make sure the ETFs you're holding aren't getting dragged. It isn't always the most obvious ETFs that are affected - sometimes the impact can extend beyond them.

Some of the oil service-related ETFs are:

• iShares Dow Jones US Oil & Gas Exploration Index (IEO), up 19.4% year-to-date
• Oil Services HOLDRs (OIH), up 7.7% year-to-date
• SPDR S&P Oil & Gas Equipment Services (XES), up 14.4% year-to-date

Oil and gas today have hit new records, reports John Wilen for the Associated Press. Analysts are beginning to wonder if gas prices will stick to their old pattern of peaking around Memorial Day, then steadily declining as summer deepens. The cost of gas can be hedged with United States Gasoline (UGA), which is up 17.7% since its Feb. 28 inception.

The rising prices seem to be eating into demand for oil and petroleum products in the United States and Europe. Maybe that will bring prices back down from the stratosphere.

The prices have given top performances to natural gas and the energy sector for 2008, and this will only continue if there's truth in analysts' predictions that oil will rise to $200 for a barrel in the near future.

The United States Natural Gas (UNG) has risen the most year-to-date with a 42.6% return, according to Morningstar. Supply and inventory issues are pushing the ETF the right direction as many anticipate higher oil prices. UNG can also be used as a hedge for energy exposure, and tracks in percentages the movement of natural gas futures on the NYME, explains John Spence for The Wall Street Journal.

The fast growth in the oil and gas sectors has many suspecting we're in a bubble ready to burst, including Michael Kahn for Barron's. Are we? Only time will tell. The surest way to protect yourself on the downside is by having your exit strategy firmly in place if and when the downturn begins. In the meantime, don't fight the trend.

Oil, the Dollar and Gold ETFs Are Working Together

Slight upticks in the dollar against the euro this week may be in sync with investors timing their re-entry into the market and exchange traded funds (ETFs).

On Thursday, the U.S. dollar was up to an eight-week high against the euro in overseas trading, with the speculation of a possible slowdown in Europe that will allow the European Central Bank to cut rates, reports Peter A. Grant for GoldSeek. The dollar seems to be contained against two other major currencies, the Japanese yen and Swiss franc.

All the while gold has kept a solid stance, and oil is only heading higher lately with the newest record high reached on Friday: $126.20.

The streetTacks Gold Shares (GLD) has been turning around with positive performance in the last week, up 3.4% in that period. As long as oil continues to rise in price, it's believed that gold should continue rising along with it.

When the Price of Oil Goes Crazy, What Happens to the ETFs?

We all know how oil futures and exchange traded funds (ETFs) that contain them operate. But if you've ever wondered if the markets could ever "stop the madness" that is the rising price of oil, the answer is "kind of."

The New York Mercantile Exchange (NYMEX) has circuit breakers in place when prices move by $10 in either direction for all months. If any contract is traded, bid or offered at the $10 limit, trading is halted for five minutes to allow traders to regroup. When it resumes, a new $10 limit is put in place and if that's reached, trading halts for another five minutes, and so on.

So, it's possible for oil to gain or lose $30 or even more in a day, but the five-minute breaks cool things off a bit before they pick up again.

It's likely trading in ETFs that contain oil futures would halt for five minutes as well. At the very least, the bid/ask of those ETFs would widen out in those five minutes because market makers wouldn't have a "live" price to use.

Using Energy ETFs To Offset Gas and Oil Prices

Frenzy in the energy sector has reached a fever pitch, but are exchange traded funds (ETFs) that allow investors to hedge those prices necessarily a great idea?

The summer driving season is going to kick off soon, but with the way things are going, who can afford it? Oil passed $126 a barrel today, while gas rose to more than an average of $3.67, reports John Wilen for the Associated Press.

Oil's price spike came after concerns about Venezuelan President Hugo Chavez's ties with rebels who are threatening to overthrow Colombia's government. It may raise chances the the United States will impose sanctions on one of its largest oil suppliers, and Chavez might then cut off our supply.

Many investors have been looking at situations like this and wondering how they can lock in the lower prices and profit from the price hikes. ETFs that hold oil and gas futures are designed to rise in value at the same time their underlying commodities are going up in price, reports Rob Wherry for Smart Money.

Natural gas has benefited from the fear that supply and inventory issues will push crude-oil prices even higher as well, says John Spence for MarketWatch. ETFs like U.S. Natural Gas Fund (UNG), up 50.1% year-to-date, has also served as a means for investors to hedge their exposure to energy.

With all this good energy flowing around the markets, a new alternative energy ETF has been launched. The Claymore/Mac Global Solar Energy Index (TAN) debuted on April 15, and has lured plenty of interest. Steve Gelsi for MarketWatch says this has been the second-fastest growing ETF from Claymore thus far. The TAN index invests in 25 companies chosen under the MAC Global Energy Index. The fund is up 0.2% since its launch.

The one hindrance to hedging is that the people who need the hedge most might be among the least likely to actually have the cash on hand to do it. And then there's the matter of the tax bill if a profit is made.

You can't forget the volatility of the energy market, either. It's prone to wild swings in either directions, and some suspect it's a bubble that's ready to burst.

This feeding frenzy in energy ETFs means that the more people who buy, the more the price goes up. It's hard to know where the speculation on rising prices ends and natural demand begins.

But if you look throughout history, whenever there's been a major bull trend, people will inevitably say it's a bubble. That may very well be the case with oil, too. But it could also go up another 50%-100% before that happens.

Don't fight the trend. But have your stop loss in place if the bubble does burst.

Other funds that trade energy futures are:

• United States Oil (USO), up 32.8% year-to-date
• United States Gasoline (UGA), up 17.3% since Feb. 28 inception

It's Anybody's Guess Which Way Oil Will Go and Which ETFs Will Benefit

If you believe oil is in an increasingly fragile bubble that's fixin' to burst, there is an exchange traded funds (ETFs) out there for you.

On Wednesday, oil nearly hit a record $124 a barrel, reports Madlen Read for the Associated Press. Just when it seems the prices couldn't possibly go any higher, there they go. Goldman Sachs earlier this week predicted that oil could even hit $200 a barrel, and that we're in the midst of a "super spike" in prices.

Midday today, oil slipped to $122.55 a barrel.

This is where it gets dicey. Do you agree with Goldman Sachs, or do you believe that the exuberance is at or approaching the level of absolute insanity?

If it's the latter, ProShares has an UltraShort Oil & Gas Fund (DUG). Zoe Van Schyndel for Morningstar says you don't even have to worry about the timing of energy prices, as you can hold the ETF indefinitely.

There are risks involved with short funds, of course. Since oil prices are notoriously volatile, making some of their most rapid movements based on rumors and speculation in addition to the usual factors of supply and demand, these ETFs can swing wildly in one direction to the next. And the effect of high oil prices on the companies isn't always predictable.

Year-to-date, DUG is down 15.9%.

Naturally, if you think that energy is going to continue on the bull run, there are some other options for you, too, including:

• United States Oil (USO), up 31.7% year-to-date
• United States Gasoline (UGA), up 16.4% since Feb. 28 inception
• PowerShares DB Oil Fund (DBO), up 32.3% year-to-date

Filipinos in Austria and ETF Feel Effects of Inflation

Rising inflation in Austria could help eat the way to a rise in the related exchange traded fund (ETF).

Filipino workers there are getting creative on ways to satisfy their daily dietary needs. For example, instead of eating rice, the price of which has shot up 30% lately, they're looking at potatoes and salad. The products are cheaper, but still nutrient-rich.

Consumer prices overall have inflated by 0.8% during April alone. They're up 3.5% for the year. 

Among the hardest-hit areas is that of food products, which are a basic need, reports Hector Pascua for ABS-CBN News. Rising fuel prices are to blame for the rise in food prices, similar to what we're seeing in the United States.

Is the iShares MSCI Austria Index (EWO) feeling the effects of a 7.8% rise in food prices for April, and the transportation fares rising 7.3%, all driven by the 26% increase in fuel prices? Consumer services only make up 0.96% of the ETF. Financials are 34.7% of the fund, however, and energy is 14.4%, so any increase may be reflected soon.

Year-to-date, the fund is up 1.8%. In the last month, it's up 7.9%.

Oil Prices, ETFs Rise On $200 Barrel Predictions

Oil exchange traded funds (ETFs) rose higher after futures (yawn) hit yet another record. What else is new?

Investors were snapping them up because Goldman Sachs predicted that oil prices rise to anywhere from $150 to $200 a barrel. The grim report sent futures past $122, but there were also concerns about declining production in Mexico and Russia, reports John Wilen for the Associated Press.

Goldman Sachs pointed to signs that the world is in the middle of a "super spike" in oil prices, which would culminate in prices eventually rising so high that demand would fall sharply.

Some analysts beg to differ from Goldman's view. Tim Evans, an analyst at Citigroup, says oil could just as easily drop to $40 a barrel as it could rise because supplies are comfortable.

Hmm...we like what Evans is saying a little better.

Analysts are equally divided on the direction of gas prices. Some say it's peaked, others say it's going to follow oil higher.

Have you, by chance, ever wondered exactly how much oil you're actually getting in those barrels? Today's your lucky day:

1 barrel = 159 liters or 42 gallons

Crude oil is measured in barrels because, to put it simply, that's the way it's always been done. According to OPEC, when oil first came into large-scale commercial use in the United States in the 19th century, it was stored in wooden barrels. Reserves are estimated at more than 1 trillion barrels. In 2006, the total world oil output was 72 million barrels per day.

Capture exposure to the rising futures of oil and gas with these ETFs:

• United States Oil (USO), up 27.7% year-to-date
• United States 12-Month Oil (USL), up 27.6% year-to-date
• United States Gasoline (UGA), up 13.5% since Feb. 28 inception

Energy ETFs Can Be Equal Parts Brutal and Rewarding

Admit it - you're tempted to invest in some energy exchange traded funds (ETFs). After all, gas and oil are hitting record highs and rising.

It's only natural that you would be, because investors tend to buy what they know. The United States, McDonald's, Disney, Target and so on. There's comfort in the familiar.

But trying to profit from energy isn't without its pitfalls, says Tim Paradis for the Associated Press. Many investors already invest in the sector by owning stock of the biggest oil companies, while others dive right into the commodities market and trade futures contracts.

One portfolio manager warns that the corrections in this sector can be brutal. Since 2004, he says, there have been at least two big corrections per year.

And then there's this paradox: those hardest hit by skyrocketing energy aren't likely to have lots of extra cash sitting around with which to invest.

Before you decide to get into the energy sector, look at the fundamentals and not this recent run. In oil's favor is that refining capacity is strained, there are supply disruptions, the dollar is weakening and speculators will push the price higher. On the other hand, demand for petroleum products fell 8.5% in February from January, while gas demand fell 6.2%.

And above all, always be sure to have your exit strategy in place if one of those big corrections occur.

Some ETFs that grant access to energy are:

• United States Oil (USO): up 23.3% year-to-date
• United States Gasoline (UGA): up 13.5% year-to-date
• iShares Dow Jones U.S. Energy Sector Index Fund (IYE): up 3.4% year-to-date
• Rydex S&P Equal Weight Energy (RYE): up 4.9% year-to-date

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

The Commodity ETF Picture Looks Different This Week

Gold futures and exchange traded funds (ETFs) began to stage a turnaround in trading today after the dollar once again fell and oil futures hit new records.

Gold today rose to $870.70, reports Bob Ewing for Digital Journal. Meanwhile, the dollar stepped back from its growth spurt, falling against the euro, and oil hit a record $120.01 a barrel, John Wilen for the Associated Press reports.

That sent investors once again scurrying for cover.

The gold-focused ETFs, streetTRACK Gold Shares (GLD) and iShares COMEX Gold Trust (IAU), surged higher after a difficult stretch a few days ago. They both closed on Friday down 3.1% for the week. iShares Silver Trust (SLV) was trading higher today, too. All three funds rose 2% at the end of trading today.

Last week, the situation looked a little different. Gold for June delivery closed on Friday at $858 an ounce. The U.S. dollar jumped after new of the U.S. labor market was not too shabby, as expected for April, report Polya Lesova and Mayra P. Saefong on MarketWatch.

As prices fell, the questions began: has the commodities bubble burst? Much like gold, wheat, rice, and silver were also on losing streaks. There was a slight rebound Friday as some of the losses appealed to bargain hunters, but are the commodities-as-a-safe haven thoughts in the past?

Where it goes next is anybody's guess.

Mexico ETF Goes Great With Chips and Salsa

What better way to celebrate Cinco de Mayo than with a heaping bowl of guacamole, a round or three of margaritas and a Mexico exchange traded fund (ETF)?

The timing is good, too: the iShares MSCI Mexico (EWW) has been gathering steam lately, going up 11.3% since March 10. Year-to-date, it's up 5.8%.

In the last decade, Mexico has delivered annualized returns of 16.99%, handily outpacing other single-country ETFs. The fund is heavily concentrated in the wireless sector, with 25.1% of the fund given to America Movil (AMX), the largest cell phone operator in Latin America.

Today, America Movil stock rose along with some mining companies, Reuters reports. Shares of Grupo Mexico, one of the world's largest producers of copper, shot up in trading today, as well. Grupo Mexico is 5% of EWW.

Mexico has also been given a lift via rising oil prices as the world's sixth-largest crude exporter. Futures rose past a record $120 a barrel today, says John Wilen for the Associated Press. However, over the weekend gas prices fell more than a cent. Don't spend those big savings all in one place.

A View of ETFs In An Obama White House

If Barack Obama were to win the election for presidency this November, what would happen to the investment world, particularly exchange traded fund (ETF) investors?

Awhile back, we talked about funds that could benefit in a McCain win, as well as an overall Democratic win.

Jonathon Bernstein for ETFZone believes that the most immediate and powerful impact of an Obama win would be the within the area of foreign policy. He could help to ease tensions with the Middle East and Venezuela, which would in turn calm oil prices and shift the overall momentum of the markets. Currently, oil is at all-time highs, so just the thought of Obama in the White House would send oil lower in funds such as Unites States Oil (USO).

The dollar might end up in a stronger state, as a major reason the dollar fell against the euro is oil imports. If the United States were to import less oil, or or pay less for the oil it does import, we might see an improved trade deficit, thus upping the demand for U.S. dollars. CurrencyShares Euro Trust (FXE) would reflect the dollar-euro ratio.

Obama says he would keep tax cuts for the middle class, and doesn't support Bush's tax cuts for the wealthy. Both those and his dividend tax cut expire in 2010. Dividend-focused ETFs such as iShares Dow Jones Select Dividend Index (DVY) or the State Street SPDR Dividend (SDY) could be vulnerable if the tax cuts aren't renewed.

Obama also supports working to put an end to global warming and a push to reduce U.S. carbon emissions by 80% by 2050. He also supports ending the ban on stem cell research.  Both iShares Nasdaq Biotechnology (IBB) and the WildersharesClean Energy (PBW) could experience positive movement if these issues are addressed.

Oil Down ETF Moves Up On Oil Price's Slide

As oil prices head south, one exchange traded fund (ETF) shot way up.

MACROshares Oil Down (DCR) closed up 10.6% in trading today after oil speculators pulled out of the market. Crude settled at $112.52, stripped of its appeal to investors as the dollar gained strength, says John Wilen for the Associated Press. Oil is sitting at its lowest level since April 14, but analysts caution that it could be temporary.

Meanwhile, the MACROshares continue to trade as they normally would after hitting a termination trigger on April 16. Sam Masucci, MacroShares' CEO, says both Oil Down and MACROshares Oil Up (UCR) will trade as though they normally would.

On June 25, they'll cease trading. On July 3, shareholders of the funds will receive payouts based on the fund's net asset value (NAV) on that day. The funds are raking in assets, says Masucci, pulling in $120 million this week.

The company has filed with the Securities & Exchange Commission (SEC) for its second set of up/down oil ETFs. The hope is that they'll get the go-ahead before the first set of funds terminate.

Exxon Earnings Put the Brakes on Energy ETFs

Some energy exchange traded funds (ETFs) are down more than 4% in midday trading after Exxon Mobil (XOM) reported a first-quarter profit jump that was less than what Wall Street was expecting.

You can't blame Wall Street for expecting more, considering the price of a barrel of oil these days. Even though Exxon's 17% profit jump to $10.9 billion was the second largest U.S. quarterly profit ever, it still wasn't enough.

Analysts were expecting $2.13 per share, but instead got $2.03 a share, reports John Porretto for the Associated Press. Exxon posted the largest quarterly profit in history for a U.S. company at the end of 2007.

Exxon's shares were down nearly 5% midday, weighing down some of the energy ETFs that count the company as a major component:

• iShares Dow Jones US Energy (IYE): Exxon is 23.1%; up 4.4% year-to-date
• Energy Select Sector SPDR (XLE): Exxon is 18.5%; up 3.3% year-to-date
• iShares S&P Global Energy (IXC): Exxon is 15.8%; up 2.9% year-to-date

Also, if you were thinking of moving out of the country in order to escape those high gas prices - not so fast. Of 155 countries surveyed, it turns out the United States is the 45th cheapest, says Steve Hargreaves for CNN Money.

Next time you drive by the pump and sob at $4 gas, think about how people in other countries must feel: in Europe, the average is more than $8 a gallon; in Aruba, it's $12.03 and in Sierra Leone it's $18.42.

If you're really itching to move, consider Venezuela, where it's 12 cents a gallon. Or Saudi Arabia at 45 cents.

But the numbers don't take some things into account: the falling value of the dollar, the differing salaries in countries and so on.

In Europe, the trade-off for the gas prices is cheaper health care and higher education, which is paid for partly through gas taxes. Europe also sports a better public transportation system.

Dollar Up, Gold Down, While ETFs Reflect Activity

The U.S. dollar is toughening up, much to the dismay of gold which hit a three-month low on Tuesday, weakening the focused stocks and exchange traded funds (ETFs).

Also on the decline were oil prices along with weak sentiment just ahead of the Federal Reserve's big meeting today. U.S. gold futures for June delivery on the COMEX division of the New York mercantile exchange settled at $876.80 an ounce, as of Tuesday. As the dollar gains strength, it makes gold more expensive for holders of other currencies, thus lowering demand.

Meanwhile, the dollar hit its highest level against the euro in four weeks. It's on track for its largest monthly gain in a year after expectations that the Fed will end its easing campaign, reports Reuters.

Returning strength in the dollar would be the major reason streetTracks Gold Shares (GLD) is experiencing money outflow. But one trader said gold's fundamentals are still firm, despite the sell-off.

The performance of the dollar vs. the euro in the last year:

Energy-Focused ETFs Capitalize on a Booming Sector

Commodity exchange traded funds (ETFs) and exchange traded notes (ETNs) have come a long way since Nov. 18, 2004. That's when the first single-commodity ETF - streetTRACKS Gold Shares (GLD) - was launched.

Surely, Transportation ETF Gets a Lift from Airline Stocks (Don't Call Them Shirley)

The transportation exchange traded fund (ETF) wrapped up trading today slightly higher after oil prices took a breather.

The iShares Dow Jones Transportation Average (IYT) was up 0.8% after three of its airline holdings blasted off in trading today. Oil prices closed at $116.44 after demand for gas and other petroleum products dropped sharply in February.

• Continental Airlines, Inc. (CAL), up 3.5%; 1.9% of the fund
• Southwest Airlines (LUV), up 3.3%; 1.4% of the fund
• JetBlue Airways (JBLU), up 2.6%; 0.6% of the fund

Year-to-date, IYT is up 14%.

For full disclosure, some of Tom Lydon's clients own shares of IYT.

Agriculture, Energy ETFs Soar, But Consumers Lose Confidence

Soaring prices for the basic necessities might be helping your agriculture and energy exchange traded funds (ETFs), but the trade-off is beaten-down consumer confidence.

A research group reported today that consumer sentiment has dropped to a five-year low in its fourth consecutive drop. Wall Street economists had been expecting low numbers, reports Anne D'Innocenzio for the Associated Press. Its previous weakest point was in March 2003, just before the U.S. invasion of Iraq.

Deteriorating confidence is a sign that consumer spending may weaken, which would in turn further hurt the economy. Consumers remain worried about inflation and the toll that rising food and gas prices could take on their wallets. The employment picture looks bleak, as well: the Labor Department is expected to show another loss of 65,000 when its April report is released on Friday.

The director of the Conference Board Consumer Research Center also noted that the number of survey respondents who planned to take a vacation in the next six months has fallen to a 30-year low.

Looks like you'll have to rely on Calgon to take you away instead.

Your Rebate Check Could Stimulate ETFs

Will exchange traded funds (ETFs) find the stimulus package stimulating?

Tax rebates will start going out today, even earlier than reported, in the hopes that they will inject a shot in the arm into our stumbling economy. Since consumer spending is 70% of the economy, the hope had been that we'll spend, spend, spend.

But President Bush says the checks will help offset the high gas and food prices that have been weighing down our wallets this year, reports Tom Raum for the Associated Press. It's a change from previous statements that the package is intended to ignite consumer spending.

In total, the Treasury will distribute more than $110 billion to 130 million taxpayers, says Catherine Clifford for CNN Money.

Depending on how you decide to use that extra cash, some ETFs could benefit.

If you use it at the grocery store, maybe an agriculture ETF such as the PowerShares DB Agriculture (DBA) or the ELEMENTS MLCX Grains Index (GRU) could reap the rewards.

Maybe if you decide to hit the mall, the Retail HOLDRs (RTH) or the SPDR S&P Retail (XRT) will get a lift.

Or if you just want to fill up your car, a trip to the pump could lift United States Oil (USO) or United States Gasoline (UGA).

How will you spend or save your rebate check?

For full disclosure, some of Tom Lydon's clients own RTH.

Silver, Base Metals ETFs Reflecting Strong Demand

Demand for silver is on the rise and it's reflected in its exchange traded fund (ETF).

Gene Arensberg for Resource Investor says the rise in demand is evident because the paper silver market isn't reflecting popular demand. The COMEX paper silver market is related to, but different, from the physical one in that it deals exclusively with very large, average 1,000-ounce "good delivery bars," and each futures contract covers the delivery of five of those bars.

The physical market is every coin and bullion shop and a range of other silver products.

The scarcity of the metal is evident now, Arensberg says, because dealers are paying higher than normal premiums, evidence of an immediate need for the metal. This means that current inventories are insufficient to meet the demand at the prevailing spot price. Some dealers are paying premiums as much as $1.85 over the spot price - costs that will be passed on to their silver-buying customers.

The iShares Silver Trust (SLV) has benefited from demand for the metal. Year-to-date, the fund is up 17.7%.

PowerShares DB Base Metals (DBB) is trading higher today, lifted by a strike against Chilean copper miner Codelco, which sent futures for the metal upward. Metals were also stronger because of the weaker dollar and May oil hitting $119.90 a barrel, reports Allen Sykora for Dow Jones Newswires. DBB is up 15.6% year-to-date.

What's Next for the MacroShares ETFs? Version 2.0

Last week, the price of oil topped $111 for three consecutive days, setting off a termination trigger for two unusual exchange traded funds (ETFs).

The last trading day for MacroShares Oil Down (DCR) and MacroShares Oil Up (UCR) will be June 25 and will liquidate the week after that.

So, what's next? MacroShares is not going away. In fact, the company considers their up/down oil funds a success, with $300 million in assets, reports Mathew Hougan for Index Universe.

They'll be issuing a new round of Macros with the starting price set at $100 a barrel. The prospectus for the down trust is here, and the prospectus for the up trust is here.

Hougan wonders if people will bite on these new funds, as opposed to just going after the other oil-related ETF products out there.

Meanwhile, Hougan reports that the MacroMarkets people are developing a paired trust tied to medical cost inflation, as well.

Gas Tax Holiday Could Be Boon to ETFs

If a plan to eliminate the gas tax this summer goes through, what could it mean for exchange traded funds (ETFs)?

Sen. John McCain proposed ditching the tax, which would shave 18 cents per gallon off the price of gasoline between Memorial Day and Labor Day. But not everyone is convinced this is a good idea. Charles Delvalle for Howe Street says if he filled up his 17-gallon gas tank four times a month, he would save $12.24 per month. With that savings, he'd be off to the supermarket.

But Jad Mouawad for the New York Times reports that while it sounds like a good idea, it could have an opposite effect on the price of gasoline. Lower gas prices could lead to more demand, which could lead to...higher gas prices. Sounds like we're running in circles. Isn't consumption part of what lead to this problem in the first place?

If the plan actually passes, Delvalle suggests hedging the rising cost with the United States Oil Fund (USO), which is up 23.7% year-to-date. USO's provider, Victoria Bay, also launched the first ETF to track gasoline futures on Feb. 28: the United States Gasoline Fund (UGA), which is up 10.7% year-to-date.

The dollar could weaken under this tax cut, as well. Hedge that with the streetTRACKS Gold Trust (GLD), up 10% year-to-date, or the iShares Silver Trust (SLV), up 20.4% year-to-date.

For full disclosure, some of Tom Lydon's clients own shares of GLD.

Oil Prices Up, Earnings Up, So Are Oil Related ETFs

As oil prices hit new highs in today's trading, the oil related exchange traded funds (ETFs) also rose on earnings reports and merger talks.

Schlumberger (SLB) was the first oilfield services company to report first quarter earnings and posted a nearly 14% increase and predicted growth for the rest of the year.  The stock rallied, even though the results missed forecasts, reports John Porretto for Associated Press.

Halliburton (HAL) announced it is considering a bid for its rival, Britain's Expro International Group, says Reuters.

Meanwhile, oil was pushed higher today to new records today, above $116 a barrel.  John Wilen of Associated Press reports that oil supply has been threatened by attacks on pipelines in Nigeria, which is a major supplier of oil to the U.S.  The militant group claiming responsibility promised further attacks on the country's petroleum industry.

All of this news is affecting oil related ETFs, such as:

• Oil Services HOLDRs (OIH), holds 10.7% of SLB and 9.5% of HAL; up 5.4% year-to-date
• iShares Dow Jones US Oil Equipment & Services (IEZ), 16.8% SLB; 7.4% HAL; up 7% year-to-date
• SPDR S&P Oil & Gas Services & Equipment (XES), 4.6% HAL; up 6.9% year-to-date

Tom Lydon Talks Oil ETFs on CNBC

Tom Lydon appeared on CNBC's "ETF Tracker" segment of Closing Bell earlier today to discuss how near-record oil prices has been making oil ETFs look pretty attractive lately. Video of Tom's segment appears below:

Oil Tops $111 for Three Days; Two Oil ETFs Terminate

It's "termination day" for a couple of oil exchange traded funds (ETFs).

Last week, we reported that the MacroShares Oil Down (DCR) and MacroShares Oil Up (UCR) would terminate if the price of oil reached or passed the price of $111 for three straight days.

We're here: on Monday, oil closed at $111.75. Tuesday, it closed at $113.30. Today, it closed at $114.93.

The last trading day for the funds will be June 25, reports Matthew Hougan for Index Universe. On June 30, shareholders of record will receive payouts based on the fund's net asset value (NAV). If the price of oil reaches or surpasses $120 a barrel by then, holders of UCR would get $40 per share (each share is valued at one-third the price of a barrel of oil) and holders of DCR wouldn't receive anything.

Oil briefly topped a record $115 after supply concerns arose, reports John Wilen for the Associated Press. Gas inventories fell by 5.5 million barrels last week, according to the Energy Department's Energy Information Administration, and it was a bigger drop than analysts had been expecting. Crude oil inventories also fell last week by 2.3 million barrels, instead of the increase that had been expected.

Gas demand has dropped off, falling 1% a week for the last four weeks. One analysts says it would normally be rising at this time of year as the travel season begins picking up. But at a record $3.39 a gallon, suddenly staying home and watching the Travel Channel is looking like a much better bargain.

If you aren't crying yet, this may move you to: Charles Maxwell, the "Dean of Energy Analysts" predicts $180 oil by 2015 and $300 by 2020, reports Aaron Task for Tech Ticker.

Other ETFs available to hedge oil and gas are:

• United States Oil (USO), up 20.6% year-to-date
• PowerShares DB Oil Fund (DBO), up 21.2% year-to-date
• United States Gasoline (UGA), up 7% since Feb. 28 inception

ETNs Elbowing Their Way Into Competition With ETFs

Exchange traded funds (ETFs) could have another competitor if things keep going the way they are: exchange traded notes (ETNs).

The industry was once small, but has slowly been picking up steam. The first ETNs launched in 2006, by Barclays Bank PLC of London, says David Hoffman for Investment News.

They're so attractive primarily because they give investors access to hard-to-reach markets. It also gives investors that access while they wait for an ETF equivalent. For example, India was covered by the iPath MSCI India Index ETN (INP) for a couple years before two India ETFs were launched earlier this year: the WisdomTree India Earnings (EPI) and the PowerShares India (PIN).

Of course, that doesn't mean that just because there's an ETN there will automatically be an ETF.

While they might share similar names and an acronym that differs by only one letter, ETNs aren't exactly like ETFs. They are backed by the issuer of the ETN, meaning that if the issuer goes under, the ETN does, too.

ETNs also receive slightly different tax treatment that's currently the subject of much debate.  ETNs that cover foreign currency lost their tax breaks last year, and the IRS is debating what to do with the others. Right now, they're treated as prepaid forward contracts for federal income tax purposes. This means investors don't realize income or recognize any gain until the note is sold.

Among the top performing ETNs year-to-date are:

• iPath DJ AIG Natural Gas TR Sub-Idx (GAZ), up 31.5%
• iPath DJ AIG Energy TR Sub-Idx (JJE), up 21.1%
• iPath DJ AIG Industrial Metals TR Sub-Idx (JJM), up 21%
• ELEMENTS Rogers International Commodity Metal (RJZ), up 19.8%

Copper and Other Resources Enrich Chile's ETF

With a reputation as one of the world's most economically progressive free market-focused nations in Latin America, the global commodities market could take Chile's exchange traded fund (ETF) to new levels.

The country's economy has grown from ties to international markets, and many are pondering if the U.S. slowdown will affect the country's continued growth.

Chile emerged from a recession in 2000, reports Don Dion for Seeking Alpha, and since then it's experienced hearty growth. In 2007, its economy grew 5.1%. A similar rate for 2008 is projected.

The country benefits from a rich supply of natural resources, especially copper; it produces one-third of the world's supply. In addition to that, it trades fish, wine, pulp and paper products, fruits and chemicals. Only 15% of the country's exports go to the United States. It's far more reliant on trade with Asia.

On the downside, Chile could be on the brink of an energy crisis, caused primarily by a drought and a natural gas shortage. However, two of the iShares MSCI Chile (ECH) top holdings, the National Electric Company (EOC) and Enersis (ENI), could benefit. They appear to be positioned to produce enough power to take advantage of the higher prices.

So far this year, ECH is up 11.3%.

Recent Oil Prices Make Up, Down ETFs Tricky

The inverse/down oil exchange traded fund (ETF) from MacroShares appears to have a mind of its own.

There are actually two funds designed to move along in a given direction according to what oil is doing: MacroShares Oil Down (DCR) and MacroShares Oil Up (UCR).

A quick explanation:

• UCR: long-term price of oil
• DCR: long-term inverse of oil
• The sum of the two funds is always $40

That's because the funds hold treasuries and cash. They're issued in pairs to authorized participants, who are then free to trade them on the secondary market. The funds' trustees have a "swap agreement" in that as the price of oil shifts, assets between the funds move accordingly. As an example, when the price of oil moves up by a dollar, one dollar is taken from the DCR trust and moved to the UCR trust.

Oil traded up more than 3% yesterday, once hitting $111.68. Yesterday, DCR was down 29.2%, while oil had been up only 3.12%, reports Bespoke Investment Group on Seeking Alpha.

What is going on?

DCR is down so much because of an early termination clause in the notes' structure. If the front-month price of crude closes above $111 for three straight days, the clause kicks in and the notes stop trading at their net asset value (NAV) on the fourth business day prior to the end of the quarter in which the termination occurs.

For that reason, DCR was trading at just above $9 per share, but the NAV was $3.83.

Considering the rapidly rising price of oil, such a scenario doesn't seem completely out of the question. Oil closed at $110.12 yesterday. It closed at $110.11 today. It's certainly flirting with the $111 mark, and it may test that termination clause.

Since each pair of these funds is worth $40 in total (or, one-third the price of a barrel of oil),  if the price actually reached this level, the Down trust would run out of money for the Up trust. The solution, says Gary for Investing Minds, is that  payouts to Up trust holders are capped at $40 per share.

If this all sounds confusing, you're not alone. It's a good lesson to always be sure you know what you're getting into when you purchase ETFs, especially when it comes to products with as much going on behind them as this one does. And read the prospectus! This clause is stated within the prospectus a number of times, warning of the risk involved with these ETFs.

New Heating Oil ETF Captures White-Hot Energy Sector

There's another entry in the category of energy commodities-focused exchange traded funds (ETFs), this one covering heating oil.

The United States Heating Oil Fund (UHN) holds futures contracts for the commodity, reports Murray Coleman for Index Universe. It's made up of near-month contracts set to expire, except when the contract is within two weeks of expiration. In that case, it invests in the next month.

One difference in this fund is that it takes advantage of something called "crack spreads," which measure the difference between profit margins when a barrel of oil is first handled to when it enters its final incarnation as things like heating oil or gas for your vehicle. Crack spreads are at historically high levels, and Coleman says that heating oil spreads on the New York Mercantile Exchange are running as high as $22.50.

This new fund is just the latest to cover the white-hot energy sector. In February, the United States Gasoline Fund (UGA) was launched - the first of its kind. The provider of UHN and UGA, Victoria Bay, also offer the United States Oil Fund (USO), United States 12-Month Oil Fund (USL) and United States Natural Gas Fund (UNG).

Speaking of "historic highs," the cost of a barrel of oil isn't getting any cheaper, reports Kenneth Musante for CNNMoney. The slick stuff surged to a new record today, hitting $112.05 a barrel, topping the previous intraday record of $111.80 set on March 17.

The jump came when the Energy Information Administration said stocks fell by 3.2 million barrels. Analysts had been expecting a jump of 2.4 million barrels. The good news, according to the publisher of an industry newsletter, is that it's a one-off to be corrected in the next two reports.

Gas is hitting new highs, too: $3.43, says AAA. Blame that on the seasonal purge of winter-grade fuel.

Transportation ETF Hit By UPS's Lower Outlook

The transportation exchange traded fund (ETF) is down 2.8% midday after UPS (UPS), a major component of the fund, announced a lowered outlook.

The world's largest shipping carrier blamed a weak economy and the skyrocketing cost of fuel for needing to trim its first-quarter earnings forecast, reports Tim Paradis for the Associated Press. Shares of UPS are down 3.2% in midday trading.

The company is 7.4% of the iShares Dow Jones Transportation (IYT). Year-to-date, the fund is up 9.5%, and is still 4.9% above its 200-day moving average. Its other top holdings are Union Pacific (UNP, 13.1%), FedEx Corp. (FDX, 9.3%) and Burlington Northern Santa Fe Corp. (BNP, 9.2%).

The news only adds to concerns about the health of corporate earnings and the economy at large.

For full disclosure, some of Tom Lydon's clients own shares of IYT.

Food Shortage Has Many Roots; ETFs Could Grow From It

The financial crisis is the talk of the country, but another crisis might be helping some exchange traded funds (ETFs), but it's hurting people around the world.

Food prices have skyrocketed over the last few years, and even more so in the last few months, says Paul Krugman for the New York Times. Even Americans who are doing relatively well are grumbling at the swiftly rising grocery bills. But in poor, developing countries, it's devastating. Food often makes up half of a family's spending.

Countries that supply food, such as Ukraine and Argentina, have been limiting their exports to protect their own consumers. This has led to protests from farmers.

How did this happen?

1) Emerging markets. For the first time, a growing number of people around the world in previously poor countries can afford to start eating the way Westerners do, and beef isn't cheap to produce.

2) Oil prices. Modern farming uses a lot of it, which drives up the cost of agriculture.

3) Bad weather. Australia, in particular, has been experiencing a massive drought. It's the world's second-largest wheat exporter, and the lack of rain has cut into their production.

Can anything be done? Krugman isn't so sure. Expensive food and expensive oil may very well remain a fact of life.

Agriculture ETFs are a way to gain exposure to this sector if the prices do continue to rise as they have been. Among the many available:

• ELEMENTS Linked to the MLCX Grains Index (GRU), down 1.4% since Feb. 15 inception
• iPath Dow Jones AIG-Agriculture ETN (JJA), up 7.6% year-to-date
• PowerShares DB Agriculture Fund (DBA), up 16.4% year-to-date
• Market Vectors Global Agribusiness (MOO), up 0.5% year-to-date

ETFs Hold Steady While Earnings Reports Are Awaited

There was no rally in the first day of trading this week for stocks and exchange traded funds (ETFs) like the one last week, in which the Dow Jones industrial average skyrocketed nearly 400 points.

At the start of the day yesterday, stocks went higher, then shifted to flat and mixed. It's earnings season, and as the numbers come in, it could create some interesting movements in the market. Right now, Wall Street is proceeding with caution while they wait, says the Associated Press. On top of that, they're also waiting for the Federal Reserve to issue minutes from its March meeting today.

The top-performing ETFs in trading yesterday were:

• iPath DJ AIG Natural Gas ETN (GAZ), up 5%
• MACROshares Oil Up Tradeable Shares (UCR), up 4.7%
• United States Natural Gas (UNG), up 4.5%
• SPA MarketGrader200 (SNB), up 3.8%

Oil Has IYE ETF Slipping All Over The Place

It seems like the skyrocketing cost of energy is getting more headlines than Britney Spears, and the related exchange traded funds (ETFs) can't seem to decide what they want to do about it.

The iShares Dow Jones US Energy (IYE) has long benefited from the price of oil. But lately, this doesn't seem to have been the case, reports Don Dion for Seeking Alpha. The reason for this may be that while oil is at all-time highs, the recent prices have more to do with speculation. It could be why IYE just isn't buying it and keeping pace.

Consider that high oil prices have resulted in record gains for oil and natural gas companies, not the stocks. Be weary of a sharp drop in oil prices, which is not that unlikely, from slower economic growth and new supplies from Saudi Arabia. The fund is down 2.9% year-to-date.

The iShares Dow Jones U.S. Oil & Gas Exploration (IEO) has fared better, up 6% year-to-date, but it's more focused on the exploration and production areas of oil (hence the name).

U.S. Oil (USO) is up 10.4% year-to-date.

Oil went higher today in the wake of bad jobs data this morning, reports Polya Lesova for Market Watch. While the unemployment rate rose to 5.1%, its highest level since September 2005, oil rose to $105.81 a barrel.