oil ETC, a little help needed

crisp

I want to put £5k into an oil ETC but I am undecided as to which of ETFS Brent 1 month (OILB), ETFS Brent 1 yr (OSB1), ETFS Brent 3yr (OSB3), ETFS Crude Oil (CRUD) or even EFTS WTI 2 yr (OSW2) would be suitable

Its a little baffling. Is there a suitable ETC to track the main quoted Brent Crude Oil Future $/barrel (around $50/barrel today)?

Is there a suitable ETC for gold prices? At moment I am trying to distinguish between ETFS Gold (BULL) and ETFS Physical Gold (PHAU) or maybe there is another.

my head hurts

purch

The ETC tracks the ICE Futures

There is a contract for each month.

The next Brent Crude contract is the June09 contract, which expires on 14/05/2009. That will be the contract tracked by the OILB 1 month ETC.

I think the 1 year, 2 year and 3 year Brent ETC's track the December contract on ICE 2010,2011 & 2012.

https://www.theice.com/productguide/ProductDetails.stripes?specId=219

crisp

thanks for that.

I am looking for ETCs for Gold

Oil
Silver
Platinum
Natural Gas

Do you have relevant codes?

jon3001

crisp wrote: »

Is there a suitable ETC for gold prices? At moment I am trying to distinguish between ETFS Gold (BULL) and ETFS Physical Gold (PHAU) or maybe there is another.

Physical Gold (PHAU) is backed by bullion held in a vault. BULL is backed by paper futures contracts.

jon3001

crisp wrote: »

thanks for that.

I am looking for ETCs for Gold

Oil
Silver
Platinum
Natural Gas

Do you have relevant codes?

They're all on here:
http://www.etfsecurities.com/

Mr_Mumble

Be very careful about ETF/Cs based on futures contracts as they don't do what most people think they do (i.e. track the price of the commodity). Plenty of reading for you

http://ftalphaville.ft.com/blog/2009/01/22/51495/how-contango-affects-oil-etfs/
http://ftalphaville.ft.com/blog/2009/02/24/52836/the-united-states-oil-fund-mystery/
http://ftalphaville.ft.com/blog/2009/03/12/53509/the-curious-case-of-etf-nav-deviations/

The above mainly talk about the huge US ETF USO but they're applicable to all the ETF Securities oil ETCs too, here's a little bit of discussion on CRUD:
http://boards.fool.co.uk/Message.asp?mid=11437006&sort=whole#11437576

If that's too much reading Jim Cramer explains it (you can skip the first 80 seconds and he starts blathering on about other stuff at 6:30):
http://www.cnbc.com/id/15840232?video=1081189370&play=1

crisp

thanks for that. I will read.

you hit the nail on the head. my concern is buying something hoping to achieve an aim (within my portfolio) then discovering the ETC isnt the right one or what I was expecting.

I want to track the price of oil, gold, silver, natural gas etc. Is this best done where the etc is backed by the product itself so there is intrinsic value?

i note in another post, half of your commodity holding is made of futures; what is the aim of holding those rather than say an ETC with physical (intrinsic) value?

mr_fishbulb

crisp wrote: »

I want to track the price of oil, gold, silver, natural gas etc. Is this best done where the etc is backed by the product itself so there is intrinsic value?

You will only be able to track the price if the ETF holds the actual physical commodity.

For precious metals, the ETF providers can do this because gold / silver / platinum is expensive relative to it's volume. One ounce of gold is worth around $900. In other words, $900 worth of physical gold to back the ETF, only weighs 1oz and doesn't take up much space.

Keeping physical oil on the other hand is next to impossible. You would need a whole barrel just to back around $50 of the ETF. This would take up an enormous amount of space. That is why the oil ETFs user futures contracts and can't track the spot price.

tradetime

crisp wrote: »

I want to track the price of oil, gold, silver, natural gas etc. Is this best done where the etc is backed by the product itself so there is intrinsic value?

There are ETF's that hold physical gold, silver, platinum, and even I believe palladium. See the link below for an explanation as to why others are not with the example of crude oil.

crisp wrote: »

i note in another post, half of your commodity holding is made of futures; what is the aim of holding those rather than say an ETC with physical (intrinsic) value?

http://forums.moneysavingexpert.com/showpost.html?p=20587123&postcount=33

Part of the overall problem is that when there is a substantial supply excess of a commodity, the market tends to enter a condition known as contango, this is where the spot price is much cheaper than longer dated contracts, the net result is that each time the contracts are rolled forwards you are selling a cheap contract and buying a more expensive one, when near term excess supply has been eradicated and demand starts to pick up, the market should enter backwardation where money can be made from the roll yield by selling a relatively expensive front month contract, and buying a cheaper next month contract, but when that will be I do not know. When that happens these ETF should outperform the physical.
The issue is further exacerbated at the moment because the central banks are forcing bond yields down, excess money in these types of funds is usually parked in bonds to derive collateral yield.
I am not familiar with the ETF Securities products, but the company that produces USO, which gets slagged off in the Cramer video also have an ETF ticker USL, this spreads it's purchase/holdings over the first 12 months futures contracts, thus it only rolls 1/12th of it's position each month, thereby reducing the effects of contango. Also the powershares ETF, I think it's DBO, takes a more active view where the fund manager looks across the yield curve and buys the contract that he feels will give the best yield, again this has reduced the effect of the contango.

crisp

tradetime wrote: »

There are ETF's that hold physical gold, silver, platinum, and even I believe palladium. See the link below for an explanation as to why others are not with the example of crude oil.

http://forums.moneysavingexpert.com/showpost.html?p=20587123&postcount=33

Part of the overall problem is that when there is a substantial supply excess of a commodity, the market tends to enter a condition known as contango, this is where the spot price is much cheaper than longer dated contracts, the net result is that each time the contracts are rolled forwards you are selling a cheap contract and buying a more expensive one, when near term excess supply has been eradicated and demand starts to pick up, the market should enter backwardation where money can be made from the roll yield by selling a relatively expensive front month contract, and buying a cheaper next month contract, but when that will be I do not know. When that happens these ETF should outperform the physical.
The issue is further exacerbated at the moment because the central banks are forcing bond yields down, excess money in these types of funds is usually parked in bonds to derive collateral yield.
I am not familiar with the ETF Securities products, but the company that produces USO, which gets slagged off in the Cramer video also have an ETF ticker USL, this spreads it's purchase/holdings over the first 12 months futures contracts, thus it only rolls 1/12th of it's position each month, thereby reducing the effects of contango. Also the powershares ETF, I think it's DBO, takes a more active view where the fund manager looks across the yield curve and buys the contract that he feels will give the best yield, again this has reduced the effect of the contango.

maybe I will stick to the horses

sabretoothtigger

Just buy bp shares and get a 7% dividend