Reasons for gold’s climb to record prices haven’t changed: a weaker dollar, inflation worries and mixed investor sentiment seem to rule the markets lately. But as gold marches forward, other metals have hitched a ride on its coattails. Platinum and palladium have hit 12-month highs, and analysts think it could continue if gold remains strong. (Copper should also enjoy higher prices despite the overstock supply).

Devon Maylie for The Wall Street Journal reports that platinum and palladium are both industrial and precious metals. As a result, they’re benefiting from hedging as well as hopes that industrial activity will take off in 2010. (Learn about the “other” metals). Silver, another precious metal with industrial applications, has also been gaining strength, handily outperforming gold year-to-date. (Six benefits of silver investing).

Copper prices have also rallied to a 13-month high on a sliding dollar and Japan’s economic expansion. Copper made up 54% of the total value of Chile’s exports last month, up from 42% the same time last year, reports Drew Benson for Bloomberg.

Spot gold hit a record high of $1,134.55 a troy ounce Monday, building on the gains it has posted over the past weeks.

For more stories about commodity ETFs, visit our commodity ETFs category.

If you don’t want gold, where can you look? Among the growing number of options include:

• iShares Silver Trust (NYSEArca: SLV): up 53.1% year-to-date

• E-TRACS UBS Long Platinum ETN (NYSEArca: PTM): up 47.6% year-to-date

http://online.wsj.com/article/SB10001424052748704431804574539160726487446.html

• ETFS Physical Silver Shares (NYSEArca: SIVR): up 15.9% in the last three months

• iPath DJ AIG Copper TR Sub-Index ETN (NYSEArca: JJC): up 109.3% year-to-date

China’s buying spree has been seen as a major driver of commodity prices in recent months. But did they get a little too carried away? David Taggart for iStockAnalyst reports that this was more bargain shopping than an actual demand-driven rally. As a result, demand for copper has not yet picked up, leaving China done with buying and considering selling. (Can the recent commodity hot streak continue?)

Analysts say that any big upward moves in copper prices aren’t expected. Large stockpiles of copper sit in warehouses and as much as 350,000 tons could be re-exported. According to Bloomberg, there are not many buyers for refined copper and the price of copper has more than doubled this year already. Finding a buyer might be tough. (Will a global recovery help spur demand for copper?)

Is copper’s run on hold for now? Some feel it may be. If it cools have, have your exit strategy at the ready to put a cap on your losses. Read about trend following in The ETF Trend Following Playbook.

For more stories about copper, visit our copper category.

• iPath Dow Jones AIG Copper TR Sub-Index ETN (NYSEArca: JJC): up 110.1% year-to-date

There are many reasons to buy into a precious metals investment, and ETFs can give the desired  exposure to gold, silver and platinum.

Gold. Gold is the godfather of all the precious metals for various reasons, according to Aryeh Katz for Investopedia:

• Gold is a safe haven and is recognized by almost all governments as being a safe store of value
• Inflationary pressures can be hedged with gold (read more on fighting inflation with ETFs here)
• War and political upheaval have always sent people into gold-hoarding mode; an entire lifetime’s worth of savings can be made portable and stored until it’s needed

Moming Zhou for MarketWatch reports that Jim Rogers recently claimed gold will hit $2,000 per troy ounce within the decade. As long as the U.S. dollar continues to weaken, gold prices could continue to rise because gold priced in dollars will become cheaper for overseas buyers (Read 7 more things you should know about gold here).

• SPDR Gold Trust (NYSEArca: GLD)
• iShares COMEX Gold Trust (NYSEArca: IAU)
• PowerShares DB Gold (NYSEArca: DGL)
• ETFS Physical Swiss Gold Shares (NYSEArca: SGOL)
• Market Vectors Gold Miners (NYSEArca: GDX)
• E-TRACS UBS Bloomberg CMCI Gold ETN (NYSEArca: UBG)

Silver. Silver – the “poor man’s gold” – is also a good way to hedge against inflation, and it benefits from its appeal as both an industrial and precious metal. This means that it can be treated as a safe haven investment, as well as an investment for investors looking to benefit from an uptick in industrial demand. A note of caution:  since silver’s market is smaller than gold’s, it can be more volatile. Silver’s main investment approach is determined by factors such as:

• Silver’s role in photography and film has kept demand high; however, the advent of digital cameras has dented the need for silver
• Middle class population growth in emerging markets is great, and this demand for industrial and electrical supplies puts much more pressure on the silver store
• Silver’s use in batteries, superconductor applications and microcircuit markets is a major source of demand
  

• ETFS Physical Silver Shares (NYSEArca:SIVR)
• iShares Silver Trust (NYSEArca: SLV)
  
• PowerShares DB Silver (NYSEArca: DBS)
• E-TRACS UBS Bloomberg CMCI Silver (NYSEArca: USV)
  

Platinum. Platinum tends to fetch a higher price than gold during routine periods of market and political stability simply because it’s much rarer. Other factors affecting platinums price include:

• The greatest demand for platinum comes from automotive catalysts, which are used to reduce emissions; after this, jewelry accounts for the majority of demand
• Auto sales and production numbers are also determinants of platinum’s price
• Platinum mines are heavily concentrated in two countries: South Africa and Russia; This places much more pressure on the platinum market.

Jeff Nielson for DNA reports that the direction of the precious metals markets are not easy to determine in the short term. The longer the time horizon (and the larger the data stream), the more predictable are the movements of companies, commodities, and overall markets.

Various ETFs that give exposure to precious metals:

• E-TRACS UBS Long Platinum ETN (NYSEArca: PTM)
• iPath Dow Jones AIG Platinum TRSub Index (NYSEArca: PGM)

In addition to specific exposure to metals ETFs, investors can also find broad metal ETFs that hold either the metals themselves, futures contracts or the stock of companies involved in the production of these metals:

• PowerShares Global Gold & Precious Metals (NYSEArca: PSAU)
• SPDR S&P Metals & Mining (NYSEArca: XME)
  
• Emerging Global Shares DJ Emerging Markets Metals & Mining Titans (NYSEArca: EMT)
• PowerShares DB Precious Metals (NYSEArca: DBP)
• iPath Dow Jones AIG Precious Metals TR Sub Index (NYSEArca: JJP)
  

For more stories about precious metals, visit our precious metals category.

For full disclosure, Tom Lydon’s clients own shares of GLD and SLV.

China’s cabinet is no longer approving new projects for energy-intensive aluminum production for three years. Chuin-Wei Yap and Juan Chen and Yue Li for Dow Jones Newswires report that the State Council, also issued new rules to contain excessive capacity in seven other sectors, including revisiting a years-long campaign to curb steel output.

The ban on new aluminum capacity, a popular metal, is primarily meant to rein in the energy-guzzling and hard-to-control industry. The markets have so far shrugged off the news.

The Chinese markets and the U.S. dollar weakness has helped prop the base metals market up, and the underlying demand is strong indicator that emerging markets have some resilience to the economic downturn, says Dorothy Kosich for MineWeb.

One analyst notes that base metals prices have hit “mid-cycle” levels, something that normally takes years after a global downturn. The analyst also predicts that copper will be the top performer among base metals, and forecasts China’s consumption to grow 20% this year.

Some related ETFs and exchange traded notes (ETNs):

• iPath Dow Jones AIG Copper TR Sub-Index ETN (NYSEArca: JJC): up 91.2% year-to-date

• iPath Dow Jones AIG Lead TR Sub-Index ETN (NYSEArca: LD): up 119.3% year-to-date

• Market Vectors Steel ETF (SLX): up 80% year-to-date

For more stories about base metals, visit our base metals category.

Climate change legislation has everyone wondering what its passage could mean to them. Steve Gelsi for MarketWatch explains that the executive types will have to cope quickly with carbon cost, rules and benefits associated with their products and services, while consumers will be reminded of the carbon footprints their purchases made during production.

The American Clean Energy and Security Act aims to cut emissions from 2005 levels by 17% in 2020 and 83% by 2050.

Verification, trading platforms, and new technology are all presenting new challenges and opportunities for companies and entrepreneurs.

Wall Street firms are ramping up their brokerage operations in order to accommodate the new market for carbon offsets and investment tools that access them, such as the current note below:

• iPath Global Carbon ETN (GRN): down 5% year-to-date

The climate change legislation now under consideration in Congress is similar to successful efforts in the 1990s to curb sulfur dioxide emissions by capping them and trading an initial pool of nine million allowances. With the new legislation, the funding is much larger.

For more stories about carbon trading, visit our carbon category.

The PowerShares DB Crude Oil Double Long ETN (DXO) will be liquidated on Sept. 9.  This is the first exchange traded product (ETP) to be dissolved in the wake of the CFTC’s investigation, says Matthew Hougan for Index Universe.

Last month, DB (as well as many other commodity ETP providers) halted creation of respective fund shares as CFTC investigated speculation in the futures markets after a steep climb in commodities, most notably in oil prices last year. As a result of the investigation, the CFTC pulled its permission for DB Commodity Services LLC to exceed federal speculative position limits on its ETF tracking corn, soybeans and wheat futures.

There is still much debate as to whether the rise in commodities prices can be attributed to speculators. Supporters of speculation point to the fact that open interest in oil futures actually declined as oil prices spiked last summer, indicating that speculators were in fact betting on a decline in prices.

Many people believe that there are no position limits in place for energy futures, but that’s not exactly the case, Hougan notes. The NYMEX has two different levels of position limits of its own for most commodities, including crude oil.

On the three days prior to expiration of each contract, NYMEX places strict position limits on the number of contracts any one party can hold.  Currently, firms are limited to 3,000 contracts or less. There’s no wiggle room here. Apparently, there is wiggle room for “accountability limits” which is outside the three-day period. Accountability limits serve as warning bells to the exchange when a firm has taken a significant position in a given commodity contract.

DXO, since it was designed to deliver twice the exposure to its underlying index, had $425 million in assets when it closed. But given its double-long status, it really controlled $850 million in the crude oil futures space. The “regulatory event” phrasing in the note suggests that perhaps the NYMEX used some discretionary power it has had, but doesn’t often employ, Hougan says.

Meanwhile, the trouble for investors still invested in other commodity-focused funds could mean that they’re paying premiums, explains John Jannarone for The Wall Street Journal. In United States Natural Gas (UNG), the fund has had a premium up to 17%. For ETFs still issuing new units, arbitragers can squeeze premiums until they disappear.

Another implication for investors could be a lack of choice if more funds close. DXO was the largest and most liquid exchange-traded product providing leveraged exposure to oil. As Bob Pasani wrote for CNBC after DXO (and several other funds) initially halted new shares, “This is a good example of the Law of Unintended Consequences. We have a problem: We think there are Dark, Mysterious Forces secretly controlling the universe (and the commodities markets), and these must be investigated. But in the process of doing that, perfectly good products get blown out.”

With premiums now a factor in certain commodity ETFs, investors can no longer view them as straight plays on a commodity’s price.

A few other ETFs affected:

• United States Natural Gas (UNG): down 61.1% year-to-date

• United States Oil (USO): up 6.7% year-to-date

For more stories about the CFTC and commodities, visit our commodity ETFs category.

Matt Kaufman contributed to this article.

iPath Dow Jones AIG Natural Gas ETN (GAZ) is the third commodity-focused exchange traded product to stop issuing new shares over the past few weeks. GAZ posted large inflows after United States Natural Gas (UNG) suspended any issuance of new shares. GAZ began the year with $20 million in assets, and by the time it decided to stop issuing new shares, it had amassed $187 million.

Yesterday, UNG entered into another natural gas-related total return swap yesterday (reported on their website at end of day) in order to reduce their holdings in listed futures contracts. The swap was for $500 million.

“This is an attempt by UNG to deal with whatever new regulations may be introduced by the CFTC and to allow us to permit creations of new units,” John Hyland, chief investment officer at United States Commodity Funds, said in an email.

UNG’s actions yesterday, and the natural gas-based swap the fund entered into a few weeks ago, Hyland said, are not enough by themselves to yet allow us to either meet what they think the CFTC limits may be. The provider feels that they are making progress, though.

Earlier in the week, PowerShares DB Crude Oil Double Long ETN (DXO) also stopped issuing shares, also in anticipation of new CFTC limits. The new regulations were imposed after the UNG fund, along with the commodity market in general, was accused of manipulating futures prices and market fluctuations.

The CFTC did rule yesterday that PowerShares DB Commodity Index Fund (DBC) and PowerShares DB Agriculture Fund (DBA) are no longer exempt from position limits in wheat and corn.

Meanwhile, we may be seeing other commodity-based notes and funds temporarily suspend trading while they wait for an official CFTC decision.

For more stories about ETNs, visit our ETN category.

The world is facing sugar shortage so alarming that the Agriculture Department has been asked to ease quotas on imports. Since the price of sugar has gone up substantially, manufacturers are warning that run-up could impact grocery shelves, reports Jerry Hrisch for The LA Times.

Analysts say those fears are overblown and that it’s just a tactic on the part of manufacturers to get the United States to take down trading barriers.

On world markets, sugar prices are up 72% for the last six months. Among the pressures on the supply of sugar include bad weather in the sugar producing region of India, the Brazilian sugar cane diversion to make ethanol and the rise of the global sweet tooth.

If the prices are reflected on grocery shelves, it may not be for awhile. Many large food manufacturers likely bought sugar futures after prices began to climb.

• iPath Dow Jones AIG Sugar ETN (SGG): up 63.4% year-to-date

For more stories about commodities, visit our sugar category.