Commodities have started the year off on the right foot after earnings from aluminum giant Alcoa pointed to a more bullish outlook for the foreseeable future. After 2011′s tough year in which 16 of the major 22 commodities lost ground, it has been a welcome start to 2012. While a number of commodity prices seem to be at cheap buying opportunities, many are fearful that further issues overseas will create headwinds for their favorite investments. Gold and oil have been two of the most talked about assets, as issues in the euro zone and Iran have been creating problems for each respective commodity. To help investors better understand today’s commodity field, we outline three of the best commodity stories from around the web this past week [see also 2011′s Best Performing Commodity Was……Milk?]:
Have Gold Bugs Eaten Platinum’s Premium? at Hard Assets Investor:
Gold’s meteoric rise over the past few years has been no secret; it has been one of the best performing commodities let alone investments in the general market space. But gold’s rise had impacts on other important commodities, notably platinum. Platinum used to trade at anywhere between a $200 and $400 premium to gold, but it did not have the trading attraction that gold was able to amass. As gold became increasingly popular in the investing world, this premium was quickly erased leaving many to wonder what the future holds for platinum. This article, by Alex Ulam, outlines platinum’s premium, how it was lost, and what it means for investors today.
Corn is now too precious for ethanol subsidies at Emerging Money:
Corn’s appeal as an investment has grown rapidly over the past few years as many have begun to view this commodity as more than just a food. Corn is used in a wide variety of applications in our everyday lives and it would be difficult to go a full 24 hours without using some kind of corn-based product. That being said, 2012 is an important year for corn now that a $20 billion a year tax credit has expired for ethanol. But farmers and traders alike are not worried, as a growing population around the world points to only further grow needs for corn and ethanol. This article, by Jonathan Yates, explains what the effects might be from the expiration of this massive subsidy.
Lessons Learned From Gold in 2011 at CommodityHQ:
Gold was one of the most talked about assets in 2011, as its price shot up to nearly $1,900/oz., smashing through previous records and catching the eye of many new investors. But despite its massive spik in price, gold would eventually come crashing back to earth as a number of outside factors combined to push the precious metal into the dirt. This article takes an in-depth look at the previous year and how gold’s behavior was influenced by a laundry list of fundamental factors.
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Disclosure: No positions at time of writing.