When it comes to investing in metals, it is the precious variety, namely gold and silver, that command the most attention among investors and the financial precious.
Indeed, gold and silver have enjoyed runs of success at various points this year, but some industrial metals are leading the way as 2016 draws to a close.
Just look at the PowerShares DB Base Metals (NYSEArca: DBB), which is up more than 29.2% year-to-date. Industrial metals like copper, nickel, iron and steel have all rebounded in recent months as traders bet on improving global economic conditions would bolster demand for the base metals after prices hit multi-year lows.
DBB’s year-to-date performance exceeds those of the largest gold and silver exchange traded products combined.
The ETF is “designed for investors who want a cost-effective and convenient way to invest in commodity futures. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely used base metals — aluminum, zinc and copper (grade A). You cannot invest directly in the Index,” according to PowerShares.
Copper prices are benefiting as investors anticipate greater demand out of China and increased infrastructure projects under president-elect Donald Trump. Some professional traders are reacting by increasing bullish bets on the red metal. Copper currently accounts for 34% of DBB’s weight.
“Even before Trump, obscure metals like tin were prospering this year as demand rose and supplies shrank. Trump’s ambitious plans could give industrial metals additional momentum as base metals including copper, aluminum and lead are essential ingredients in construction and manufacturing,” reports CNBC.
After starting the year as a laggard among commodities exchange traded products, the iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) has recently been a leader among metals-related exchange traded products.
Other options for accessing base and industrial metals include the PowerShares DB Base Metals Long ETN (NYSEArca: BDG) and the ETRACS CMCI Industrial Metals Total Return ETN (NYSEArca: UBM). The remainder of DBB’s lineup is allocated to zinc and aluminum.
ETNs “are debt-backed securities, trade on very low volume compared to ETFs and also have very small asset bases compared to ETFs,” notes CNBC.
For more information on the metals, visit our industrial metals category.
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.