Gold may not have a banner year this year, but a recovery that lurches in fits and starts may be enough to sustain safe-haven demand. Jason Scott for BusinessWeek reports that Newmont Mining Corp. (NYSE: NEM), the largest U.S. gold producer, said it’s “quietly confident” that prices of bullion will increase this year. Two reasons for their confidence: central banks haven’t been unloading gold and investors are still looking for shelter from global turmoil. A third factor could be the U.S. dollar, which has gained strength over the last four months, but still remains weak. Gold is usually priced in dollars; a weak dollar makes it cheaper for international investors to purchase. [Junior Miners ETF Getting a Boost.]

GoldAlert reports that both gold prices and shares have gone through a consolidation over the past 15 weeks and may continue to do so, although they seem to be feeling as favorable toward the metal as Newmont does. Gold miners have regained some footing and the macro-economic climate supports a lift of gold prices overall. [Challenges Facing the Mining Industry.]

Lastly, U.S. Global Investors CEO and CIO Frank Holmes has a few thoughts on gold that he shared on Yahoo’s Tech Ticker Recently. Watch it here.

For more stories about gold miners, visit our gold miners category.

• Market Vectors Junior Gold Miners (NYSEArca: GDXJ)
• Market Vectors Gold Miners (NYSEArca: GDX)

For full disclosure, Tom Lydon is a board member on the U.S. Global Investors.

Trend 1: Small Caps Kicking You-Know-What

Small-cap ETFs are dusting large caps. The primary reason? History. In recovery periods, small-caps tend to lead the way toward the light. They’re smaller and quicker to react to shifts in economic and market conditions. Large companies have lots of flag poles up which to run various matters and issues, leaving big changes in strategy to get caught in bureaucracy. In the last month, small-caps are up about 11%, vs. about 7% for large-caps and 8% for mid-caps. [The Case for Small-Caps in 2010.]

• Rydex S&P SmallCap 600 Pure Value (NYSEArca: RZV)
• WisdomTree SmallCap Dividend (NYSEArca: DES)
• iShares S&P SmallCap 600 Growth (NYSEArca: IJT)

Trend 2: What’s the Beef with Fixed Income?

Even we have sounded the alarm: fixed-income could get hit as the Federal Reserve hikes interest rates. And that’s still true. But right now, it’s copacetic; there’s been a lot of bark with no bite yet in sight. Yields continue to be appealing in certain areas, too. For example, the SPDR Barclays Capital High Yield Junk (NYSEArca: JNK) is yielding 12.2% right now. Long-term Treasuries will get beat in a higher interest rate environment, but short-term Treasuries and corporate bonds have been fine. Have an exit strategy in place if and when that changes, though. [8 ETFs That Can Add Income to Your Portfolio.]

• iShares iBoxx $ High Yield Corporate Bond (NYSEArca: HYG)
• Vanguard Short-Term Bond (NYSEArca: BSV)
• SPDR Barclays Capital Short-Term Corporate Bond (NYSEArca: SCPB)

Trend 3: Base Metals Heat Up

The “shiny” metals are out; base metals are in. The stars seem to have aligned for a possible rally in base metals: China is growing, building and importing base metals faster than they can be used in new skyscrapers; other emerging markets are also building and importing metals; the auto market is slowly recovering, lending support for a rally in platinum and palladium and the U.S. housing market is recovering in fits and starts. All this building and recovery means more demand for copper, platinum, steel and other building blocks of construction at home and abroad. [Why Metals ETFs Are Leading the Charge.]

• PowerShares DB Base Metals (NYSEArca: DBB)
• iPath DJ-UBS Copper ETN (NYSEArca: JJC)
• ETFS Physical Platinum (NYSEArca: PPLT)

For more stories on spotting trends and acting on them, read our special report on trend following.

Last week, we discussed physically backed ETFs, which are just as the name implies: each share is backed by a physical product. Right now, physically backed ETFs only give exposure to precious metals. You won’t find an ETF backed by barrels of oil or livestock. [4 Types of Commodity ETFs.]

Physically backed ETFs have a special appeal to smaller investors who either lack the space for storage, or the inclination to hunt down and pay for storage themselves. In ETFs backed by physical metals, all you need to do is show up and buy a share. The rest is taken care of for you. [Contango and What You Can Do About It.]

These ETFs tend to correlate more closely to the spot price than commodity funds that hold equities or futures. The taxes are a bit different, too: profits in bullion-based ETFs are taxed at 28% (but consult your personal tax professional for specific advice). [ETFs and Taxes: What You Should Know.]

Physically backed commodity ETFs also enjoy the other benefits of ETFs, including cost-efficiency, tax efficiency and transparency (the bullion holdings in these funds are subject to regular audits and the results are posted on the ETF provider’s website).

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

• SPDR Gold Trust (NYSEArca: GLD)
• ETFS Physical Platinum (NYSEArca: PPLT)
• iShare COMEX Gold Trust (NYSEArca: IAU)
• ETFS Physical Palladium (NYSEArca: PALL)
• iShares Silver Trust (NYSEArca: SLV)
• ETFS Silver Shares (NYSEArca: SIVR)
• ETFS Gold Shares (NYSEArca: SGOL)

One of the most popular commodity ETF types are those that hold and trade futures contracts for the underlying commodity. Futures are a promise to buy or sell a commodity for a set price on a date that’s in the near future. None of the ETFs that hold futures contracts claim to track the spot price of their respective commodities. [4 Commodity ETF Types.]

The majority of these funds buy the near-month contract, selling it before expiration and buying the next month’s contract, and so on. If the price of the next month’s contract is higher than the current month’s, it’s a situation called contango, and it could cost you money when the contracts are rolled over. A negative roll yield (contango) could cause the net asset value (NAV) of a fund to deviate even further from the spot price of its underlying commodity. The opposite situation is backwardation. [What Contango Means for Oil ETFs.]

One way to mitigate the effects of contango is to look for ETFs that hold contracts throughout the year. There are just two such funds now: United States 12-Month Oil (NYSEArca: USL) and United States 12-Month Natural Gas (NYSEArca: UNL).

The purpose of a 12-month strategy will help protect futures investors from the problem of contango. Two weeks before the expiration of the nearest-month contract, the fund will roll forward another month, picking up the then-12-months-out contract.

Other examples of futures-based ETFs include: United States Natural Gas (NYSEArca: UNG), PowerShares DB Gold (NYSEArca: DGL) and iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG). [Risks and rewards of futures-based ETFs.]

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.

The First Trust ISE Global Copper (NASDAQ: CU) and First Trust ISE Global Platinum (NASDAQ: PLTM) give investors the first exposure to platinum and copper equities in an ETF form.

Until now, copper exposure was available in an exchange traded note (ETN) via iPath Dow Jones UBS Copper (NYSEArca: JJC) or as a component of the PowerShares DB Base Metals (NYSEArca: DBB), which is 40% copper futures. [Why Metals ETFs Are Leading the Charge.]

Platinum exposure is available through the popular ETFS Physical Platinum (NYSEArca: PPLT), as well as through ETNs such as UBS E-TRACS Long Platinum (NYSEArca: PTM), UBS E-TRACS Short Platinum (NYSEArca: PTD) and iPath DJ-UBS Platinum (NYSEArca: PGM).

Mark Abssy, index and ETF manager at ISE, says the indexes behind the copper and platinum funds were developed in 2008 as investor interest in the ISE and First Trust natural gas ETF, First Trust ISE-Revere Natural Gas (NYSEArca: FCG) was gaining momentum. Commodities were also becoming a part of more and more headlines, leading ISE to think about other commodities that might be of interest to investors. “We were thinking along those lines – what can we help investors get exposure to?” Abssy says. “The first two we came up with were platinum and copper.” [Platinum and Palladium Price Drivers.]

The market cap minimum of $75 million is admittedly low. The reason, Abssy says, is that when considering  mining stocks, there are a number of companies still in the exploration stage, but have yield estimates based on geological surveys. “Much of their valuation is tied to the value of the commodity,” he says. Those companies tend to be more sensitive to underlying commodity price action, offering more direct exposure to the underlying commodity than fully functioning mines. [Your Guide to Investing In Metals ETFs.]

In the copper fund, the country allocations are Canada, 42%; Great Britain, 22%; Peru, 9.3%; Australia, 7%. There are also holdings in Russia, Turkey and other areas. If you’re surprised that Chile isn’t on the list, there’s a reason for that. Abssy acknowledges that while Chile is a major copper producer, many of the names already held in the underlying index already have major properties in Chile. Also, many of the major Chilean miners are still privately held. [The Impact of Chile's Earthquake.]

“There are many cross-deals in the mining industry,” Abssy says. “You wouldn’t necessarily think that a tiny company is connected to a large one, but the industry is like a big extended family.”

The platinum country breakdown is South Africa, 29%; Canada, 25%, Great Britain 17%. Other countries appearing in smaller amounts include Australia, Russia and a few U.S. names.

The outlook for both the platinum and copper markets looks to be on the bullish side of things as the domestic and global economies recover even further:

• Auto demand might be tepid now, but it’s showing signs of reviving.
• Ryan Issakainen, an ETF strategist at First Trust, also points out that when you combine the rate of cars being scrapped to the rate of population growth, it’s potentially a formula for an increase in auto sales and production in the United States alone. Auto demand in emerging markets is also becoming more robust.
• There are also tightening emissions standards; platinum and palladium are key components of catalytic converters, and can’t be substituted with any other metal.
• There are trace amounts of platinum group metals (PGMs) found in smoke detectors, airbags, computer hard drives and they’re heavily used in the pharmaceutical and cancer research industries, as well.
• On the copper side, a Barclays study recently projected that by the end of 2015, 1.5 billion Chinese citizens would each be using 12 pounds of copper – “astronomical when you think about the relatively tight supplies of copper,” Issakainen says.
• Copper is also a major component in new buildings – it’s heavily used in wiring and pipes, two things any modern buildings can’t get by without. “Copper is used very heavily in the emerging markets buildup,” says Issakainen.

Both funds have an expense ratio of 0.70%.

For more stories about copper and platinum, visit our categories.

While marking your ballot for best actor, best actress and best costumes might be fun and games for you, picking a winner is no game for the Academy of Motion Picture Arts and Sciences. The organization will use a system – called preferential voting – that generates yearly complaints from statistician nerds and conspiracy theorists everywhere, reports Christy Grosz for The Los Angeles Times.

The film that earns the 2010 best picture Oscar will  take home the trophy after having earned a majority of No. 1 votes. And even if you couldn’t care less who wins or loses, Steve Martin and Alec Baldwin are sure to give us a few good laughs for the evening, as the host the 82nd annual awards show. [Watch the Leisure and Entertainment ETF.]

Which picture do you think will take home the gold? And just so you know, Oscar is not solid gold. The little guy is made of gold-plated britannium.

For more stories about leisure and entertainment, visit our leisure and entertainment category.

• SPDR Gold Shares (NYSEArca: GLD)

• PowerShares Dynamic Leisure & Entertainment (NYSEArca:PEJ)

The dollar is at a crossroads, having made some decent gains in recent months (PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) is up 2.4% year-to-date). While some feel that this could mark a new era of strength for our currency, others see potholes lurking in the distance. [How to Take Advantage of the Euro's Drop.]

Jordan Di Pietro for The Money Times is one such person. It wasn’t so long ago that the dollar sagged to a 15-month low against a basket of major currencies and analysts are calling for an equally dreary 2010.

What could knock the dollar off its lofty perch?

• Interest rates are stagnant. The Fed announced that the target federal funds rate will be set at 0% to 0.25% for “an extended period.” With interest rates that low, foreign investors will continue borrowing in the United States and investing abroad, where they can get higher returns. In turn, foreign markets will rise and additional investment abroad will continue to weigh on the dollar.
• Foreign investment: The rapid influx of capital into emerging markets such as China, India, and Brazil could raise the value of their currencies, as asset prices tend to increase over time. Again, in this equation, the dollar could be on the losing end.

Where does that leave you?

If you’re among the dollar bears, one way to hedge that weakness is to diversify away from dollar assets. DiPietro says that one way to do this is by investing in domestic small-cap companies that earn at least 20% of their revenue overseas. A weak dollar makes our goods and services cheaper for foreigners. Schwab U.S. Small-Cap (NYSEArca: SCHA) could be an opportunity.

Commodities also tend to fare better when the dollar is weak; resources like oil and gold are generally priced in U.S. dollars, making them cheaper and thus more appealing for international buyers. United States Oil (NYSEArca: USO) and ETFS Gold Shares (NYSEArca: SGOL) are two funds out of many that will nab you this exposure.

And don’t forget the bearish dollar ETF, PowerShares DB U.S. Dollar Index Bearish (NYSEArca: UDN), a straightforward way to play negative dollar sentiment.

If you’re bullish on the dollar, one way to capitalize is by looking abroad. A strong dollar means greater purchasing power, but conversely, less demand for American goods. You might begin to see more goods purchased from China, more investment in emerging markets, greater imports of basic materials from major producers and  so on. And, naturally, the bullish dollar fund is a direct play on a gaining greenback. A few funds that might work in this kind of environment include:

• iShares FTSE/Xinhua China 25 (NYSEArca: FXI)

• EGS Dow Jones Emerging Markets Titans Composite (NYSEArca: EEG)

• iShares S&P Latin America 40 (NYSEArca: ILF): Latin America is one of the most resource-rich continents in the world

• Market Vectors Steel (NYSEArca: SLX): has nearly a 60% weighting to overseas markets

• PowerShares DB U.S. Dollar Index Bullish (NYSEArca: UUP)

For more stories about the dollar, visit our currency ETF category.

What’s pushing gold up, down and all around these days?

• Concern about Greece. Thankfully, the debt-riddled country has pushed through billions in budget cuts. While they’ve sparked unrest in the form of strikes, this also means that the European Union could extend a bailout package to further assist the nation. [Gold ETF: Fact and Fiction.]
• Safe Haven. Remember back in 2008, when investors couldn’t get enough of gold and other safe-haven instruments? While the economy looks much better now than it did then, there are still a lot of questions that lack clear answers. When will consumers begin to really spend? When will jobs come back? And that real estate recovery…how is that coming?
• Currencies. As the crisis in Greece deepened, investors were loath to hold the euro. While the dollar has been gaining ground on the euro, there are skeptics who doubt it will last. Those skeptics found a home in gold as a currency alternative. [Precious Metals and the Regulators.]

Gold prices yesterday settled at $1,139.90 an ounce, down slightly from the highest price it reached since Jan. 11.

For more stories about gold, visit our gold category.

• SPDR Gold Shares (NYSEArca: GLD)

• ETFS Gold Trust (NYSEArca: SGOL)

• iShares COMEX Gold Trust (NYSEArca: IAU)

• PowerShares DB Gold Fund (NYSEArca: DGL)

After ETF Securities‘ popular funds launched, platinum and palladium prices surged to highs:

Graphic courtesy of the Wall Street Journal.

And get ready: there’s another platinum-backed ETF in the hopper from the provider, which would be a basket of precious metals that include gold, silver, platinum and palladium. For that reason, prices for platinum and palladium are likely headed higher in the longer term, says Matt Whittaker for The Wall Street Journal. [Other Metals Sparking Interest.]

The metals markets are hot right now, and even as gold prices climb, the demand for platinum and palladium is still high even when you discount the existence of these ETFs. The supply-and-demand chain is favoring fundamentals behind the metals, which are used primarily by the auto industry for catalytic converters. Auto sales in February revealed that many automakers had improvements in their sales.

There are also narrow supplies and production issues in South Africa, which is one of the world’s foremost platinum producers. [What's Driving Platinum and Palladium Prices?]

At more than $1,500 an ounce, platinum is well above the lows it hit in 2008, when it dropped below $800.

For more stories about platinum, visit our platinum category.

• ETFS Physical Palladium (NYSEArca: PALL)

• ETFS Physical Platinum (NYSEArca: PPLT)

An increasing federal deficit coupled with a large decline in the U.S. dollar may eventually translate into rapid inflation and higher metal prices, while the dollar’s recent strength and higher interest rates could mean that precious metals will drop in value, comments Jonathan Bernstein for ETFZone. [Hedge Inflation With These ETFs.]

That’s why investors need to be prepared to act accordingly. Not all metals have a similar reaction to shifting market conditions.

ETFs offer exposure to precious metals such as gold, silver, platinum and palladium, and base metals like copper, nickel and lead. Precious metals are lightly counter-cyclical, affected by interest rates and the dollar, while base metals are highly cyclical, performing well in a strong economy. [4 Factors Influencing Metals ETFs.]

Commodity ETFs come in a variety of incarnations; which you choose is up to you. It depends on the kind of exposure you want, what kind of risk you’re willing to endure and taxes you’re willing to deal with.

Funds can be physically backed by the metal itself, it can have ownership of futures contracts to buy the metal, it can hold companies involved in the mining and production of a metal. [Copper ETN: Forging Ahead?]

A fund that is backed by the physical commodity has the metal stored in a vault. Investors should note that these funds have storage fees calculated into their expense ratios. Also, physical bullion trades are taxed by the IRS at the collectibles rate of 28% instead of the long-term equity rate of 15%. Investors should still consult their tax experts for specific advice, though. [What's Driving Platinum and Palladium ETFs?]

• SPDR Gold Shares (NYSEArca: GLD)
• iShares COMEX Gold Trust (NYSEArca: IAU)
• iShares Silver Trust (NYSEArca: SLV)
• ETFS Physical Gold (NYSEArca: SGOL)
• ETFS Physical Silver (NYSEArca: SIVR)
  
• ETFS Physical Platinum Shares (NYSEArca: PPLT)
• ETFS Physical Palladium Shares (NYSEArca: PALL)

Funds may also own futures contracts to buy the metal. Contracts are rolled over before expiration, and another contract is purchased in its place. Rolling over contracts generates trading fees. Futures contracts are taxed at a lower maximum rate of 23%.

• PowerShares DB Precious Metals Fund ETF (NYSEArca: DBP)
• PowerShares DB Base Metals Fund ETF (NYSEArca: DBB)
• PowerShares DB Gold Fund ETF (NYSEArca: DGL)
• PowerShares DB Silver Fund ETF (NYSEArca: DBS)
• Ultra Gold ETF (NYSEArca: UGL)
  
• ProShares UltraShort Gold (NYSEArca: GLL)
• ProShares Ultra Silver (NYSEArca: AGQ)
• ProShares UltraShort Silver (NYSEArca: ZSL)

Many metals ETFs give investors exposure to the companies that mine and produce the metals. While such funds don’t give you access to spot prices, they have their own advantages. One big one is that mining companies can continue to do well if a commodity’s price steps back, but remains far above the cost of production. Such funds also lack the big day-to-day swings that have a tendency to vex futures- and physically-backed metals ETFs.

• SPDR S&P Metals & Mining (NYSEArca: XME)
• Market Vectors Gold Miners (NYSEArca: GDX)
• Market Vectors Junior Gold Miners (NYSEArca: GDXJ)
• EGS DJ Emerging Markets Metals & Mining Titans (NYSEArca: EMT)

Lastly, funds may offer exposure through notes or exchange traded notes (ETNs). ETNs are taxed by the long-term equity rate of 15%. ETNs are unsecured debt backed by the full faith and credit of the issuer. They have no tracking error. [ETNs: Everything You Want to Know.]

• ELEMENTS Rogers International Commodity Metal ETN (NYSEArca: RJZ)
• E-TRACS UBS Bloomberg CMCI Industrial Metals ETN (NYSEArca: UBM)
• iPath DJ AIG Industrial Metals ETN (NYSEArca: JJM)
• PowerShares DB Base Metals Long ETN (NYSEArca: BDG)
• iPath AIG Copper (NYSEArca: JJC)
• iPath DJ AIG Lead (NYSEArca: LD)
• iPath DJ-AIG Aluminum (NYSEArca: JJU)
• iPath DJ AIG Nickel (NYSEArca: JJN)
• E-TRACS UBS Platinum (NYSEArca: PTM)
• iPath DJ AIG Platinum (NYSEArca: PGM)
  
• PowerShares DB Gold Short ETN (NYSEArca: DGZ)
• E-TRACS UBS Short Platinum ETN (NYSEArca: PTD)
• PowerShares DB Base Metals Double Long ETN (NYSEArca: BDD)
• PowerShares DB Base Metals Double Short ETN (NYSEArca: BOM)
• PowerShares DB Base Metals Short ETN (NYSEArca: BOS)
• PowerShares DB Gold Double Long ETN (NYSEArca: DGP)
  
• PowerShares DB Gold Double Short ETN (NYSEArca: DZZ)

For more information on metals, visit our precious metals category or base metals category.

For full disclosure, Tom Lydon’s clients own shares of XME.

Max Chen contributed to this article.