Commodity ETF Alert January 2009 Portfolio Update

January 27, 2009

It’s ugly out there.

The market keeps trending lower. Since our last report, the Dow’s lost more than 500 points. Volatility is out of control. I don’t remember ever seeing so many daily swings of 100, 200, or even 300 points. It’s like riding a roller coaster.

I’m glad I’m focused on the commodities market.

Overall, commodities are trending lower. Our “everything” index lost just over 6% in the last two weeks. However, the results are mixed across the different commodity groups.

Four of the groups – Energy, Livestock, Softs, and Industrial Metals – are down. While Grains are flat. One group is showing tremendous outperformance… the Precious Metals group is up 5.4%.

That’s a great move in just two weeks time.

Gold is a big component of this group. And, as you’ll see below, our position is doing really well.

In the Industrial Metals complex, the future’s not so bright. We’re starting to see mining companies cut back on expansion plans. With the price of industrial metals down so much from last summer, the number of profitable mining sites is shrinking fast.

Demand is also suffering with China cutting back on imports. I think we’ll see industrial metals resume their march higher once demand from China returns.

Let’s take a look at our open positions…

Position Updates

…. iShares COMEX Gold Trust (IAU) – Hold

This was our new trade for the month of January.  I expected a move higher, but I didn’t think it would be so aggressive.  The recent stock market volatility is really helping our position.

In the last few days, IAU traded above our buy-up to price.  Everyone should have a nice profit already.  One day we crossed above $90 intraday.  We’re moving this trade to a Hold.  Buy IAU only if it dips back below the $88 level.

Action To Take

 •  Move IAU to a Hold from a Buy… we’re above the buy up to price.

Category: Commodity Trading