Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Tuesday, January 09, 2007

What's So Bullish About Commodities? I'll Show You

I was having a conversation with a colleague the other day, and he commented on the fact that the widely-tracked CRB index had broken down and seemed headed lower.

"But that's an energy-heavy index," I said. "Don't go by that. Many commodities are doing fine."

He challenged me: "Show me a commodity index that's not breaking down ... that's not uranium!"

Well, you know I like a challenge...

Here is the CRB Index (monthy). Yep, this energy-heavy index , which is weighted down with petroleum and natural gas contracts, doesn't look good.

But now let's look at an EQUALLY-weighted commodity index.
This is the Continuous Commodity Futures Price Index (CCI) is interesting, being an equal-weighted geometric average of commodity price levels relative to the base year average price. This Index is the old CRB Index -- before it became heavily weighted to energy.


Check out my new gold and energy blog at