Gold No Longer Worth Its Weight

Year-to-Date Dow Jones-UBS Commodity Index is off 5.41%

  • Gold, the commodity with the heaviest 2013 target weight in the DJ-UBS CI, no longer is the most heavily weighted commodity in the index, falling from 10.8% to 9.5% since the beginning of the year. The DJ-UBS CI Natural Gas Subindex, the best performer YTD, has now taken over as the most heavily weighted single commodity in the index, rising from a 2013 target weight of 10.4% to 14.7%.
  • Despite the fall across the energy sector, the DJ-UBS CI Natural Gas Subindex added 4.0% last week bringing the MTD and YTD returns up to 9.0% and 25.3%, respectively, as it continues to rally from cold weather and high electric power sector demand, especially as stricter environmental rules make coal burning more expensive. Given the relatively high weight of natural gas, the DJ-UBS CI Energy Subindex is up 4.0% YTD and is the only positive sector in the index.
  • The DJ-UBS CI Precious Metals Subindex, the worst performing sector lost 8.53% this week, causing MTD and YTD returns to be -14.20% and -18.89%, respectively.  DJ-UBS CI Gold Subindex had its biggest one day loss ever,-9.3%, on April 15, 2013 to hit its lowest level since Feb 2, 2011. The decline was due to worries about central bank sales, especially from Cyprus, but also, from the Fed winding down bond purchases.  However, buying improved from India ahead of the Akshaya Tritiya, a gold buying festival, next month.  Also, the wedding season has started and will continue until June. The DJ-UBS CI Silver Subindex hit its lowest level on April 19, 2013 since Oct 4, 2010.
  • To sweeten the softs, the harvest of cane and output of sugar was slowed by a very rainy start to April.  Also, Brazil’s coffee areas have moved northwards, so the frost may not affect the crop as much as in past years as the frost-risk period approaches. The DJ-UBS CI Coffee and Sugar are up 2.6%, and 1.3%, respectively MTD.

Index Performance through April 19, 2013

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