Where Metals are Going in 2014

[Bornite or Peacock Ore]

Modern life is dependent on industrial metals. If you are interested in making an investment that gives you exposure to public companies that provide base metals for a host of uses, consider the PowerShares DB Base Metals Fund (DBB).

DBB is an exchange-traded fund (ETF) that offers a way to tap into the prospects of several key metals. For example, aluminum is important for everything from transport to beverage containers, since it is light, rust-resistant and highly conductive. Zinc is added to iron and steel as a galvanizing agent, thereby making those metals rust-resistant. Zinc also is an additive in a wide range of products, from paint to plastics. Copper is vitally important to the electronics industry, appearing in circuit boards and power lines. That shiny metal also has uses in building, machinery and consumer products, among others.

DBB attempts to replicate, before fees and expenses, the performance of a rules-based index composed of futures contracts in aluminum, zinc and copper. However, this is a highly volatile and non-diversified fund, so it carries additional risk compared to many investment alternatives.

So far in 2014, DBB is down 1.66%. The previous year saw the fund fall 12.5%, even though the S&P 500 rose 29.6%. As you’ll see from the chart below, this commodities fund is highly volatile, with a general downward trend for the year punctuated by frequent temporary gains.


The fund holds roughly equal London Metal Exchange futures contracts for each of the metals in which it invests: aluminum, copper (grade A) and zinc. The exact weightings fluctuate daily based on the underlying futures prices. The fund also includes interest income from its holdings of U.S. Treasury securities.

Exclusive  What the Most Profitable Markets of 2014 Have Been

Industrial metals are the base of the modern age. Electronics, modern construction and modern transportation all are dependent on these metals for safety and reliability. As an investor, however, base metals would represent a volatile and risky part of your portfolio. PowerShares DB Base Metals Fund (DBB) reflects the sector’s volatility.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You may see your question answered in a future ETF Talk.

In case you missed them, read my commodities-focused e-letters from previous weeks about commodities fund GSG, soybean fund SOYB and nuclear energy fund URA. I also invite you to comment about my column in the space provided below.

Like This Article?
Now Get Doug's FREE Special Report:
The New Gold Rush of 2016-2017

With gold already up 20% in 2016, one of the best market timers in the business sees even bigger things ahead. His free special report will show you how to play the coming “gold rush” for serious profits.

Get Access to the Report, 100% FREE

previous article

After a couple of weeks of trading, things haven’t been as smooth for the equity markets as they were last year.


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 4 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

  • Forecasts & Strategies
  • Skousen High Income Alert
  • Fast Money Alert
  • Five Star Trader
About Mark Skousen

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Instant Income Trader
About Bryan Perry

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

  • The Alpha Investor Letter
  • Bull Market Alert
  • Alpha Algorithm
About Nicholas Vardy

Doug Fabian

A 30-year Wall Street veteran and famed market timer, Doug Fabian is one the nation's foremost experts on ETFs (Exchange Traded Funds). His two ETF-focused advisories include:

Product Details

  • Successful ETF Investing
  • ETF Trader's Edge
About Doug Fabian

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details



Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research. Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

Product Details