On the face of it commodities appear to be in trouble. The big three; gold, silver and crude are all looking somewhat sick. Needless to say the big commodity ETFs (like DBC, DJP, GSG) are also taking strain. So we can only sympathise with the average investor as he begins entertain bearish views on commodities. However, there appears to be a tale of two cities in the commodities market, on the one hand the futures market of the commodity market is depressed but the spot prices of commodities are trading at multi-week highs.
We have long felt that the futures market for commodities is heavily manipulated and hides the true behaviour of the commodity market in general. So we constructed out own proprietary index of vital industrial commodities for which there is not a market conducive to speculative activities. The components of this index are; polyethylene (plastic), coal, wool, pulp, and rubber. Compare the ETF DBC with our Proprietary Commodity Index!
One of these charts is telling the true picture of the trend in commodities. We suspect it is not the picture depicted by the ETF DBC!
