The hot streak commodity exchange traded funds (ETFs) saw this year is now on a cooling trend, as values have dropped 26-44% in the three months leading to Tuesday.
The commodities slide is vast, and mutual funds have also taken hits. Crude oil is down 35% over the past three months, and metals such as silver and platinum are down in the range of 34% to 49%. Gold is the only metal that has sustained the dropoff, reports Shefali Anand for The Wall Street Journal.
Commodity prices have come down as more investors have begun to feel that a global economic slowdown will likely reduce demand for commodities and metals. Also, some large commodity funds and hedge funds have faced investor redemptions or have had to shut down and sell their commodity positions, thus depressing the price of various commodities and commodity stocks.
The latest coordinated rate cut has done little to stop the slide of stocks, and the trip down for oil prices, copper and other commodities will continue. Gold is the exception to the turmoil in the financial markets, as it is acting like a shelter for investors.
Fears that the crisis could slash demand generated the widespread losses in commodity and energy markets, reports Nigel Hunt for Forbes.
Always have a trading strategy, and stick to it. We watch the 200-day moving average or when an ETF falls 8% off its high. If a sell point is implemented at the appropriate time, you can guard yourself against further losses.
- PowerShares DB Agriculture (DBA): down 18.7% year-to-date; 37.6% off Feb. 26 high
- SPDR Metals And Mining (XME): down 50.7% year-to-date; 64.1% off June 30 high
- Market Vectors Steel (SLX): down 58.3% year-to-date; 68.3% off May 16 high
- Market Vectors Coal (KOL): down 49.8% since Jan. 15 inception; 65.7% off June 18
- iShares S&P GSCI Commodity Indexed Trust (GSG): down 12.1% year-to-date; 39.3% off July 2 high
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.