2011 has been a pretty good year for commodities overall as a weakened dollar, supply concerns, and strong growth in emerging markets, have combined to keep many products in high demand. While key commodities such as corn, gold, and copper often dominate the spotlight, a group of metals known as ‘rare earths’ have truly been the star performers so far this year. In fact, some of the top metals in the group, such as Neodymium, Dysprosium, Yttrium, and Erbium, have put up gains that would make metals such as silver or gold’s performances in 2011 look down-right bearish. For example, of the four rare earths outlined above, the worst performer has put up a gain of ‘just’ 50% while several have seen their prices surge by over 200% in year-to-date terms, suggesting to many investors that a bull market is alive and well in some commodities despite the global economic malaise.
When it comes to investing in commodities, there are a number of factors to consider. Investors research everything from how the commodities are used down to the nuts and bolts of how specific futures trade. While there are a number of things to keep in mind when making a commodity allocation, the production side of the equation is perhaps the most important. A number of popular commodities are produced or mined in very specific areas of the world, as certain geological or climate conditions yield vastly different results [see also Top Seven Strangest Commodity Futures].