This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Commodities That Could Heat Up in 2011

NEW YORK ( TheStreet) -- Commodities had a blistering rally in 2010, on the back of global supply shortages, strong demand from China and a weak dollar.

The rally in the second half of 2010 was particularly strong, as further quantitative easing from the Federal Reserve sparked inflation fears and drove investors to add commodities to their portfolio.

Still, Barclays Capital notes that the recent commodities rally isn't due entirely to the weak dollar. The Dow Jones-UBS Commodity Index, adjusted for the trade weighted value of the dollar, is still up 13% since June.

Market experts from Jim Rogers to Marc Faber have been arguing that we are in the middle of a multi-year boom in commodities, as demand from China and India grow to unprecedented levels for everything from food to gold and industrial metals and supply trails behind.

Total commodity assets under management is projected to end the year at $340 billion after starting 2010 at $270 billion, as prices rise and investors pour money into commodities, according to Barclays Capital.

>>Top 10 Commodity Stocks of 2010

In a survey of more than 300 institutional investors, including hedge funds and professional money managers, 69% of the respondents said they will initiate or increase their exposure to commodities over the next three years. About 60% said the annual average benchmark commodity returns will be about 6% to 10% in 2011, while 28% estimate returns will exceed 10%.

Most investors said they sought commodities for portfolio diversification, but 36% said they bought commodities for absolute returns, in another sign of bullishness in the asset class.

Commodity prices remain hugely dependent on China's demand. Investors will be closely watching for measures its government takes to curb inflation and cool its overheating economy.

Regulation of commodities markets in a bid to curb speculation amid rising food prices could also hurt commodity prices.

Read on for an outlook on the main commodity classes and tips for how best to trade them.
1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GLD $123.65 1.95%
SD $0.00 0.00%
CHK $6.87 1.33%
DVN $34.68 -3.96%
FCX $14.00 10.58%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs