Monthly Archives: October 2010

Gold, silver and sugar… Oh my!

The value of gold is up 22.14% year to date and has risen 7.89% higher since the beginning of September. The surge of gold prices have been attributed to the devaluation of world currencies, increased global demand for the precious metal and speculation of QE2. In the short run a pullback in gold prices is likely possible but the long term trend is still intact to march higher. A popular exchange traded fund,  SPDR Gold Trust (GLD), is the 6th largest holder of gold.

Silver has been hotter than gold rising 36.55% year to date and up 19.59% since the beginning of September. It’s been trending higher for much of the same reasons as gold and may have more room to run if the global economy improves due to the industrial usage of silver. The iShares Silver Trust ETF (SLV) has been a reasonable counterpart with silver prices.

The price of sugar is up 5.2% year to date but has surged 39.7% in value since August 31st. The falling U.S. dollar and concerns with sugar production in India and Brazil have sparked a strong rally in sugar the last several weeks. The iPath DJ-UBS Sugar TR ETN (SGG) is a stock esque investment vehicle for sugar investors. So far, this particular ETN has underperformed sugar futures contracts.

Commodities in general have greatly appreciated the past month. When something moves up very quickly a pullback typically occurs not far behind. Use caution and prudence before committing new capital to any investment.