The New Oil: Metals

Add to that the open interest of the similar IntercontinentalExchange WTI contract, which only began trading in January 2006 but today sports open interest of close to 600,000 contracts. Together, that represents four-times growth in about four years. That's just in domestic West Texas Intermediate-grade crude oil.

You could also factor in the growth in OI in Brent oil contracts, various sour crude contracts, over-the-counter products describing other grades and forward arrangements and an almost limitless spread of customized derivative products and -- well, you get the idea.

And let me tell you something, folks, something obvious but true: When managers come in to give clients exposure in commodities, they're not sellers.

Now, let's also note that when managers come in to give clients exposure in oil as opposed to cotton, they do it more readily because the fundamental excuses of growth, the weak dollar and geopolitical issues, are so strong. But our key is to remember that these ultimately add up to excuses to continue buying, not value judgments on price.

What we need are other commodities where we can apply the same excuses and invest, perhaps not totally based on value but instead on an increasing influx of managed money that hasn't yet completely run its course. In simple terms, we're going to find commodity-based equities that preferably have had a recent dip and rely on the inevitable flow of capital to return to them. In this environment, that ought to be easy.

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At the time of publication, Dicker was long Southern Copper, but positions can change at any time.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 20 years' experience. He is a licensed commodities trade adviser. Dan's recognized energy market expertise includes active trading in crude oil, natural gas, unleaded gasoline and heating oil futures contracts; fundamental analysis including supply and demand statistics (DOE, EIA), CFTC trade reportage, volume and open interest; technical analysis including trend analysis, stochastics, Bollinger Bands, Elliot Wave theory, bar and tick charting and Japanese candlesticks; and trading expertise in outright, intermarket and intramarket spreads and cracks. Dan also designed and supervised the introduction of the new Nymex PJM electricity futures contract, launched in April 2003, which cleared more than 600,000 contracts last year alone. Its launch has been the basis of Nymex's resurgence in the clearing of power market contracts over the last three years. Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts as an analyst of the oil markets on CNBC, Bloomberg US and UK and CNNfn. Dan is the author of many energy articles published in Nymex and other trade journals. Dan obtained a bachelor of arts degrees from the State University of New York at Stony Brook in 1982.