Pork Outdoes Gold In The First Quarter

April 08, 2010

How did individual commodities fare in the first three months of the year? We run the numbers and find a few surprises.

  • Gold beaten by most metals, including copper
  • Why the market's bullish on gasoline
  • Bullish on cotton, not on sugar


The hallmark of a solid investment used to be the affirmation that it was "good as gold." In the first quarter of 2010, though, you'd have had the best deal in pork, not the yellow metal.

As fascinating as precious metals may be, the world of hard assets includes a broader pallet of commodities, some more easily forgettable than others. Take that pork, for example. Live hogs, which churned 7.1 percent higher last year, paled in comparison to gold's 24.1 percent advance. In the opening quarter of 2010, though, their roles reversed, as spot hogs jumped 27.5 percent, and gold drifted to a paltry 1.3 percent gain.

Hogs may have been the standout performer in this year's opening stanza, but the competition wasn't particularly fierce. Quite a few individual commodities covered by dedicated or narrowly focused exchange-traded securities were gainers—67 percent (12 of 18) to be exact. Still, by and large, the gains weren't very dramatic, at least when compared with the returns in the hog market.

Here, in no particular order, are the first-quarter spot returns, together with the gains and losses of each commodity's associated exchange-traded security product (ETP):




Commodity 31-Dec-09Price 31-Mar-10Price Gain/(Loss) ETP:Type ETP Gain/Loss
CMX Gold $1,097.80 $1,112.50 1.3% GLD: GT 1.5%
CMX Silver $16.910 $17.515 3.6% SLV: GT 3.6%
NYMX Platinum $1,476.80 $1,646.20 10.3% PTM: ETN 7.1%
NYMX Palladium $407.80 $478.60 17.4% PALL: GT 6.7%
CMX Copper $3.3435 $3.5500 6.2% JJC: ETN 5.5%

Key: GT = Grantor Trust; ETN = Exchange-Traded Note


The slight disparity in returns for the gold products is due to basis. The SPDR Gold Shares Trust (NYSE Arca: GLD) is priced off the London morning fix, which is set six hours ahead of the COMEX gold settlement.

The difference seen in the platinum and copper products, on the other hand, is largely a timing artifact, since the returns for the exchange-traded notes are calculated off their last trade price, not their quarter-ending bids or offers. Often, there can be a considerable disparity between these prices, depending upon the turnover in the exchange-traded securities.

Palladium's differential owes to its novelty. Trading in the ETFS Physical Palladium Shares (NYSE Arca: PALL) only commenced on Jan. 14, so two weeks of parabolic gains have been carved from its record.

The precious metals market returns reflect growing investment demand as a bulwark against the perceived diminution in dollar purchasing power wrought by massive government spending. Platinum group metals and copper are prices also driven by burgeoning industrial demand as the economy recovers.

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