Commodity Funds Post Biggest Losses

NEW YORK (TheStreet) -- No investment goes straight up or down for very long. The commodity rally ran out of gas this week in a sharp pullback.

The dip is bringing back the buyers looking to hold commodities, which tend to do well during the early phases of an economic recovery.

For the week ending Thursday, Aug. 20, the average commodity fund we track dropped 4.2%. , excluding inverse funds and the energy funds I reviewed last week.

The worst-performing commodity fund this week is ProShares Ultra Silver(AGQ Quote). It tumbled 15%. This double-leveraged exchange traded fund follows 200% of the daily performance of silver.

Two other funds tracking silver, PowerShares DB Silver Fund(DBS Quote), down 7.6%, and ETFS Silver Trust(SIVR Quote), down 7.4%, also made the list of the 10 worst-performing commodity funds.

The declines were slightly worse than the 7.3% drop in the spot price of silver. With stockpiles of silver at COMEX-monitored warehouses contracting by 194,552 ounces to 117.4 million troy ounces in the four days ending Aug. 19 and worldwide industrial demand expected to return, look for silver to return to rally mode.

The second-worst performing fund this week is the PowerShares DB Base Metals Double Long ETN(BDD Quote), which melted down by 12%. The underlying index weightings are 39% zinc, 38% copper and 23% aluminum, which slid 5.7%, 5.2%, and 7.7%, respectively, in the past five trading days.

Three narrowly focused exchange traded notes did worse than their targeted commodity. iPath Dow Jones-UBS Aluminum Subindex Total Return ETN(JJU Quote) lost 9.6%. Nickel spot on the London Metal Exchange dove 8.1%, and the corresponding fund, iPath Dow Jones-UBS Nickel Subindex Total Return ETN(JJN Quote), plunged 9.4%.