Monday, January 15, 2007

Commodity Indices CRB vs. CCI Part 2

At September 2006 I have posted about an interesting divergence between the CRB and CCI commodity indices. The divergence has extended much farther and the CCI methodology have proved to be better (see the CCI & CRB weekly charts below), at least from for capital appreciation point of view. It appears that crude oil and crude oil derivatives commodities are weighted heavily in the CRB and other propriety indices.

Going forward commodities investors should be cautious as some commodities are at a point they can easily decline by up to 50%. It is my opinion that the commodities markets will be more difficult this year with increased divergence (between different commodities) and higher volatility.

CCI Index chart

CRB Index chart

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