Commodity Trading Trends: Natural Gas Futures Continue Their Slide

Natural gas continues to be one of the most frustrating commodities for 2012. After seeing prices hit new lows by the day, a number of investors speculated that its price could not possibly get any worse; they were wrong. NG futures are still struggling to establish a healthy trend as prices have dropped more than 17% on the year with over 8% of that coming in the trailing five day period. Low prices can be attributed mainly to this year’s winter, or lack thereof. The winter of 2011-2012 is on pace to be the mildest winter on record, as warmer than average temperatures have slashed demand for gas-powered utilities. This led to high stockpiles which, in turn, slaughtered prices to their current levels [see also 25 Ways To Invest In Natural Gas].

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Kings Of Commodity Dividends: ETF Style

Income investors often feel that commodities are not sound investments for their portfolio as something like a futures contract on gold offers no yield. But there are plenty of other ways to make a play on commodities while adding the safety net of dividend yield. Some turn to stocks while others are more partial to the security that index funds offer, namely, exchange traded products. ETFs offer investors immediate diversification through a single ticker while holding onto added benefits of intraday liquidity, transparency, and some favorable tax treatments. A number of ETFs that choose to focus on commodities come with handsome yields attached. Below, we outline the highest yielding commodity products [see also 12 High-Yielding Commodities For 2012].

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Solar ETFs Flare Up In 2012

With natural gas prices sinking to historical lows and crude oil futures whip-lashing amidst the ongoing geopolitical tensions in the Middle East, many are turning to alternative energy investments in search of lucrative returns [see 25 Ways To Invest In Alternative Energy]. Solar energy in particular, which is often times associated with rampant volatility, has actually caught the attention of many investors in 2012 thanks to impressive performances out of this corner of the market.

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Commodity Trading Trends: Silver Futures Take The Lead For 2012

When investors think of precious metals, their go to image is gold. Gold has gobbled up headlines over the past year as it has smashed through historical highs and been a major point of contention among the financial world. But digging deeper than gold, there is another precious metal that is outperforming its popular counterpart; silver. While gold’s massive gains were thrust into the spotlight, silver has been able to provide massive returns without all of the fame and popularity. The investment thesis behind silver is also different from gold, as silver is a relatively practical metal from an industrial standpoint, but is also used as a safe haven metal much like gold [see also Why No Investor Should Own GLD].

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Why No Investor Should Own GLD

Those looking for a reason to add commodity exposure to their portfolio will find gold’s massive historical return to be heavily persuasive. This precious metal has quickly become one of the few safe haven investments left on the market as investors will typically flock to gold when equities falter. Some swear by futures contracts, while others are more partial to obtaining their gold positions by investing in the mining sector, which can offer offer lucrative opportunities as these securities often have high betas. Still, others have embraced exchange traded products as their primary means of establishing a position in this commodity [for more gold news and analysis subscribe to our free newsletter].

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This Week In Commodities: February 17th Edition

This past week, though a bit rocky for equities, was strong for a number of major commodities. Cocoa futures continued about their winning ways with a healthy jump of over 10% in the trailing five day period while natural gas and crude oil also welcomed strong gains. Despite NG futures rising this week, the battered commodity is still down more than 12% for the year, leaving many investors with differing opinions as to where the fossil fuel is headed. On the other end of things, coffee and lumber futures headed south this week, as they were among the biggest losers. In an effort to keep our readers up to date with today’s commodity environment, we outline three of the best stories from around the web below [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].

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Why Warren Buffett Hates Gold

When the Oracle Of Omaha speaks, investors tend to listen. In his latest prophecy, Warren Buffett makes the case for why stocks deserve a place in your portfolio over gold any day. His criticism of the precious metal stems from his definition of investing; which is foregoing consumption now in order to have the ability to consume more in the future. Buffet offers an insightful overview of the investment landscape, splitting up the financial universe in three categories: currency-based investments, nonproductive assets, and productive assets [see also Doomsday Special: 7 Hard Asset Investments You Can Hold In Your Hand].

Posted in Academic Research, Asset Allocation, Commodity Producers, Exclusive, Gold, Precious Metals | Tagged | 32 Comments

Commodity Trading Trends: Coffee Futures Continue Their Slide

Commodity futures are known to exhibit a fair amount of volatility, but there is perhaps no group of assets more volatile than the softs. Soft commodities, which consist of cocoa, coffee, cotton, and sugar, are known for their large daily movements, as it is not uncommon to watch these contracts jump by 3% in a single trading session. As such, they make for extremely lucrative trading opportunities, despite their high risks. So it comes as no surprise that a number of investors actively trade these four commodities in hopes of turning big gains. It is also important to note that all four of these have very different price drivers, so while an asset like cotton has enjoyed a strong 2012, coffee has done just the opposite [see also Five Commodity MLPs With Sky High Yields].

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Five Commodity MLPs With Sky High Yields

Income investors groaned at the news of the Fed’s recent decision to hold rates in their near-zero rate rut until late 2014. That could mean nearly three years until we see an uptick in interest rates which points to three years of scrapping for steady income around markets as interest rates of 0.25% are less than enticing for most investors. But for those who live and die by dividend yields, there are still a number of options available, especially in the commodity space. Investing on the equity side of commodities can offer low correlation (though not nearly as low as the direct commodity itself) while providing a handsome income stream [see also 12 High-Yielding Commodities For 2012].

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This Week In Commodities: February 10th Edition

The back and forth markets that ensued over the past week made it difficult for commodities to find their footing, as a number of big name assets lost ground over the trailing five days. Among the biggest losers were cotton and cocoa, as the soft commodities are known for their inability to handle volatile markets. Gold was also a loser, though not as severe, which may create an interesting buying opportunity for traders and investors who have a soft spot for this hard asset. As for the week’s winners, lumber and brent crude oil were able to post meager gains, but it was a slow week for the overall commodity space. In an effort to keep investors up to date in today’s fast-paced commodity world, we outline three of the best stories from around the web this past week [see also The Ten Commandments of Commodity Investing]:

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