Why Commodities Surged in April

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Behold the April Commodities Surge

April is in the books and, for equities, it was another winning month added on to a winning year-to-date performance. The S&P 500 finished the month up 0.85%, but that was a bit deceptive, as the index sold off about 1% on April 30. That decline trimmed the bullish mood a bit, but still the S&P 500 is up 3.3% through the first four months of the year.

Stocks in broad-based international markets are doing much better than their domestic counterparts. For example, the iShares MSCI EAFE Index (EFA) was up 3.65% in April, and year to date the benchmark international fund is up 9.32%.

A really big region for equally big equity performance is China. The iShares China Large Cap (FXI) spiked 15.6% in April, and year to date the fund is up 23.3%.

While the outperformance of international equities, and specifically China, vs. domestic stocks is something subscribers to my Successful ETF Investing newsletter have benefitted from all year, the real surprise action in the markets in April was in commodities.

Both oil and gold stocks were up huge last month, and now we need to watch these trends to see if and/or when they might start really affecting other markets.

In the oil patch, we saw the iPath S&P GSCI Crude Oil TR ETN (OIL) surge 24% during the month, as oil extricated itself from its multi-month plunge. Oil prices now are back above the 200-day moving average, a development that will be met with ambivalence from both bulls and bears.

OIL_050115

On the precious metals front, we have the Philadelphia Gold & Silver Index ($XAU), up some 11.3% in April. This measure of gold and silver mining stocks is indicative of speculation that gold and silver prices will be heading higher soon, although we haven’t seen that speculation reflected in the actual spot price of gold or silver.

Exclusive  Aurora's Big Miss

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I expect the trends here of international vs. domestic stock outperformance to continue in May. As for oil and gold and silver mining stocks, that’s the bigger unknown right now — and that’s why we’ll be monitoring this area closely going forward.

Kantian Knowledge and Wisdom

“Science is organized knowledge. Wisdom is organized life.”

— Immanuel Kant

The extremely influential philosopher’s ideas are both interesting and controversial, but here he offers us some non-controversial advice on the distinction between science and wisdom — and the important role both play in our lives.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week about the strongest-performing ETFs of the year. I also invite you to comment in the space provided below.

Upcoming Appearance

I invite you to join me at the MoneyShow Las Vegas, May 12-14, 2015. With stock picking taking on renewed importance as the market shows signs of volatility, this event offers an opportunity to hear from a number of experts, including my Eagle Financial Publications colleagues Mark Skousen, Chris Versace and Bryan Perry.

Be a guest of Eagle Financial Publications and register for FREE by using priority code 038656 and calling 800-970-4355 (toll free in the United States and Canada) or signing up online.

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Yesterday, the first-quarter real Gross Domestic Product (GDP) growth rate came in at an anemic 0.2%, confirming my view that the economy has slowed to a crawl.

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