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Don Dion's Weekly ETF Blog Wrap

Among the issues Don Dion blogged about this week on were China's recovery, a Vietnam ETF and a South Africa ETF.

Chinese Recovery Could Push Nickel Higher

Posted 9/17/2009 9:50 a.m. EDT

China's fabled pig farmers are back in the news, courtesy of Sucden Financial. The farmers made a splash last month when word got out that they were stockpiling industrial metals. Bloomberg reports that the head of business development in Asia sent an email estimating that more than half of the inventory in Shanghai comes via speculation. He also estimated that speculators have 20,000 tons of nickel.

While some analysts worry that this metal could come back to the market and crush prices, others speculate that it is being hoarded for monetary value.

iPath UBS Copper ETN (JJC) is near its 52-week high and up more than 10% since the end of July. iPath UBS Nickel ETN (JJN) is down 3% during that time and peaked on Aug. 5. From the peak, it is down 18%.

Speculators bought at the right time, when prices were severely depressed, but it will take economic recovery to push the metal higher, especially with the Chinese government encouraging the purchase of gold and silver as a store of value.

Those looking to play an economic recovery can consider the ETNs or the PowerShares DB Base Metals (DBB) ETF, which holds copper, aluminum and zinc. PowerShares also offers an ETN tracking the same index, PowerShares DB Base Metals Long (BDG), but the volume averages only 4,000 shares per day vs. almost 500,000 for DBB.
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BZF $12.92 -2.05%
DBB $11.98 1.44%
FXY $83.77 1.17%
JJC $24.02 0.33%
JJN $9.81 2.08%


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