Many of the metal commodities have been enjoying a nice rebound thanks to renewed faith that China will continue to snap up vast amounts of natural resources. According to the Economist.com, another factor lately has been the merger deal making. In late June Xstrata and Anglo American proposed a merger. If completed this would produce the third-largest mining company in the world. This news comes only week after Australian mining giants Rio Tinto and BHP Bilton agreed to combine their iron-ore operations in Australia.
Meaning of Mergers
Mergers usually mean lower costs for the merged operations which is great for shareholders. Additionally, the combined resources, and exploration opportunities of the two companies could position the merged firms nicely for the next commodities run. As the world emerges from the recent financial funk countries like India and China are sure to increase their appetite or metals. That is not to say the U.S. and its infrastructure spending which will help demand for metals.
Your ETF Plays
The iShares Global Materials Sector ETF (ticker MXI). More than half of this fund is in mining (specifically the stocks mentioned in this post). The fund is up 17.80% YTD. The fund is also above its 50 day EMA and and just above the 200 day EMA.
Chart courtesy of StockCharts.com
The SPDR S&P Metals and Mining ETF (ticker XME). While this is a domestic fund it still has plenty of potential with a commodity run. The fund is up 30.62% YTD. Additionally, the fund is above its 50 day moving average and making dancing near its 200 day EMA.
Chart courtesy of StockCharts.com
Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and may hold positions in the ETF(s) listed above. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.
