US FINANCIAL SECTOR ie BANKS
by plotting the financial sector against gold. As the fear of a financial collapse waned, financials headed higher and gold headed lower. The more confidence there is in the financial sector recovery, the higher the financial sector has gone and the lower gold has gone. Gold looks almost like the mirror image of the financial sector since mid-2011 when gold peaked.

(click to enlarge)

 

AUDUSD and GOLD
Gold traders may also be surprised to hear that trading the Australian dollar is just like trading gold in many ways. As the world\’s third-largest producer of gold, the Australian dollar had an 84% positive correlation with the precious metal between 1999 and 2008. Generally speaking, this means that when gold prices rise, the Australian dollar appreciates as well. The proximity of New Zealand to Australia makes Australia a preferred destination for exporting New Zealand goods. Therefore, the health of New Zealand\’s economy is closely tied to the health of the Australian economy, which explains why the NZD/USD and the AUD/USD have had a 96% positive correlation over the same time period. The correlation of the NZD/USD with gold is slightly less than that of the Australia dollar but is still strong at 78%.

GOLD AND 10 YEAR BOND YIELDS and INTEREST RATES

That however is not how gold has been behaving. Gold has been demonstrating direct correlation with bonds and inverse correlation with interest rates – the exact opposite of what would happen if gold was acting as an inflation hedge.,

That observation has not gone unnoticed, as Claude Erb, a former commodities portfolio manager for Trust Company of the West and co-author Campbell Harvey, a Duke University finance professor, highlight in a recent National Bureau of Economic Research Report entitled “The Golden Dilemma.”

In the report they highlight that gold and the 10-year treasury yield have an R-Squared of 0.78.

In the case of the gold-interest rate correlation over the last decade, Erb told me in an interview, the r-squared is a very high 0.78. (Click here for a summary of his findings.)

Most correlations on Wall Street don’t come anywhere close to being that high. Indeed, many of the drugs that get FDA approval have lower r-squareds between their use and positive medical outcomes.

As pointed out, that is a very high R-Squared for these kinds of relationships. The author then used this simple single variable model to forecast the price of gold given various interest rates. He claims that a 3% yield on the 10-year Treasury would translate into a gold price of $1,196.70/oz, a 4% yield would result in a price of $841/oz for gold, a 5% yield would take gold down to $471/oz and that it would take a 1% yield to get gold back up to $1,900/oz.

If the 10-year Treasury yield rises to 5%, gold will fall to $471 an ounce… And if that yield rises to just 4%, from its current 2.8%, gold will still plunge – to $831… for gold to make it back to its all-time high above $1,900 an ounce is for the 10-Year Treasury yield to fall to 1%… At the beginning of 2013, of course, that yield stood at 1.76%, and gold bullion stood at nearly $1,700. He told me that the model at that time would have predicted bullion’s price would be $1,196.70 when the 10-year yield hit the 3% point.

That point was reached on Dec. 26 of last year, and the London Gold Fixing price on that day stood at $1,196.50.

That counts as hitting the bulls eye.

Why this is so important is because gold is acting in a counterintuitive manner. The classic relationship of gold to inflation has been flipped on its head. Unlike past times when gold performed well when inflation developed, it is likely that gold will do just the opposite this time, at least in the early to mid stages of this recovery. The reason gold has such a lofty value isn’t because of inflation from printing all this “money out of thin air,” it is because of fear of a financial collapse. Gold has a fear premium built into it, not an inflation premium.

Higher interest rates will signal economic recovery, a return to normalcy, a lowering of the risk of a financial collapse, higher inflation and lower gold prices. The key is that the fear premium has to be removed before an inflation premium gets built in. The cycle in gold therefore is likely lower gold prices in the near to intermediate future, then a period of consolidation as the economy picks up steam, but not so much as to threaten undesirable levels of inflation, and then a tightening labor market, the emergence of demand driven inflation and then higher gold prices as the inflation premium starts to build. That however may be a long way off given the tremendous excess capacity that exists in the labor market.

The term ETF (Exchange-Traded Fund) is generally used as an umbrella term to refer to a range of different exchange-traded products. But in fact, ETF refers to a specific product type within a wider range of investment products. The correct umbrella term for all of these products is ETP (Exchange-Traded Products).

ETPs encompass:
– ETFs
(Exchange-Traded Funds)
– ETCs (Exchange-Traded Commodities/Currencies)
– ETNs (Exchange-Traded Notes)

That’s enough acronyms to make your head spin! But this article will explain everything as simply as possible.

ETF Chart

ETPs (Exchange-Traded Products)
Exchange-Traded Products are best defined as open-ended investments listed on exchanges and traded like stocks. They are investments that aim to replicate the performance of a given market, whether that market be in currencies, commodities, debt or equity.

ETFs (Exchange-Traded Funds)
Exchange-Traded Funds track market indices, such as equity and fixed-income indices. They are UCITS III compliant, which means they abide by certain rules in order to be marketed to the general European public.

ETFs represent about 90% of the overall ETP market in terms of total assets under management.

(For a more comprehensive ETF definition, read “What is an ETF?To learn about different ETF categories, read “ETFs: Active vs. Passive & Physical vs. Synthetic”) 

ETCs (Exchange-Traded Commodities/Currencies)
Exchange-Traded Commodities are similar to ETFs; however they track the performance of commodities markets, either using a physical/spot approach or futures contracts. They are fully collateralised, meaning that counterparty risk is hedged out. The main difference between ETFs and ETCs is that the latter are debt securities instead of funds.

Exchange-Traded Currencies are also secured debt securities and they give investors exposure to foreign exchange rates.

ETCs are not UCITS III compliant, which means they cannot be marketed across different national borders within the EU.

ETNs (Exchange-Traded Notes)
Exchange-Traded Notes are generally senior, unsecured, unsubordinated debt issued by a single bank and listed on the exchange. They are not asset-backed. The underwriting bank agrees to pay an index return, minus fees upon maturity. Therefore by buying this product, investors get direct exposure to the credit risk of the underwriting party.

There are two types of ETNs: collateralised and uncollateralised notes. Collateralised ETNs are hedged partly or fully against counterparty risk whereas uncollateralised ETNs are fully exposed to counterparty risk. Investors should therefore make sure they fully understand the underlying risk of the ETN before investing.

– See more at: http://www.morningstar.co.uk/uk/news/69341/a-beginners-guide-to-different-etf-categories.aspx#sthash.ucxnnAGj.dpuf

How The Metal Market
Prices Are Set

Precious Metal Market Prices Are Set Daily

The London Gold Fix or Gold Fix is the procedure by which the price of gold is set on the London market by the five members of the London Gold Pool. It is designed to fix a price for settling contracts between members of the London bullion market, but informally the Gold Fix provides a recognized rate that is used as a benchmark for pricing the majority of gold products and derivatives throughout the world’s markets. The Gold Fixing is conducted twice a day by telephone, at 10:30 GMT and 15:00 GMT.

The first fixing took place on 12 September 1919 amongst the five principal gold bullion traders and refiners of the day: N M Rothschild & Sons, Mocatta & Goldsmid, Pixley & Abell, Samuel Montagu & Co. and Sharps Wilkins. The gold price then was four pounds 18 shillings and ninepence (GBP 4.9375) per troy ounce.  Gold prices are fixed in United States dollars (USD), Pound sterling (GBP) and European Euros (EUR).

On 21 January 1980 the Gold Fixing reached the price of $850, a figure not overtaken until 3 January 2008 when a new record of $865.35 per troy ounce was set in the a.m. Fixing. [1] However, when indexed for inflation, the 1980 high would equate to a price of $2398.21 in 2007 dollars, thus the 1980 record still holds in real terms.

The Fixing historically took place twice daily at the City offices of N M Rothschild & Sons in St Swithin’s Lane, but since 5 May 2004 it takes place by telephone. In April 2004 N M Rothschild & Sons announced that it planned to withdraw from gold trading and from the London Gold Fixing. Barclays Bank took its place from 7 June 2004, and the chairmanship of the meeting, formerly held permanently by Rothschilds, now rotates annually.

A tradition of the London Gold Fixing was that participants could raise a small Union Flag on their desk to pause proceedings. Under the telephone fixing system, participants can register a pause by saying the word “flag”, and the chair ends the meeting with the phrase “There are no flags, and we’re fixed”. “As part of this change, it is intended that a web-based commentary of the Fixing will be introduced later this year”, the Fixing said in a statement.

The current 5 participants in the Fixing, who must be members of the London Bullion Market Association, are:

Scotia-Mocatta — successor to Mocatta & Goldsmid and part of Bank of Nova Scotia

Barclays Capital — Replaced N M Rothschild & Sons when they abdicated

Deutsche Bank — Owner of Sharps Pixley, itself the merger of Sharps Wilkins with Pixley & Abell

HSBC — Owner of Samuel Montagu & Co.

Société Générale — Replaced Johnson Matthey and CSFB as fifth seat

How the Prices of Platinum and Palladium are Set

The Johnson Matthey Base Prices are the company’s quoted selling prices for wholesale quantities of platinum group metals set by their trading desks in the USA, Hong Kong and London, based on market offer prices.  The price is for metal in sponge form, with minimum purities of 99.95% for platinum and palladium, and 99.9% for rhodium, iridium and ruthenium, and is normally available to customers for several hours after it is set – an advantage not offered by any other price setting or fixing.

How the Price of Silver is Set

Handy & Harman has operated as dealers in silver and gold bullion (bars) and coins since its founding in 1876.  On the basis of their experience in precious metals, Handy & Harman began, in 1892, to issue a daily silver price as a service for American silver producers. This price, based initially on conversion of the London price to American terms, rapidly became the basis for virtually all silver transactions throughout North America.

Handy & Harman’s daily silver price quotation has long since become independent of London. Today it represents simply the lowest price at which, on any given day, Handy & Harman can buy silver for its own needs and this price is accepted as a guide for silver transactions worldwide.

Information obtained from Wikipedia (en.wikipedia.org/wiki/Gold_Fix),
Johnson Matthey (www.platinum.matthey.com/info/1046776915.html
Kitco (66.38.218.33/glossary/london_fix.html), and
The Handy & Harman Story (www.handyharmancanada.com/hbpm/hhstory.htm)

COMPANIES LEAST AFFECTED BY FALL IN THE DOLLAR (LEAST AFFECTED ON TOP)

  • Paladin Energy
  • Ten Network
  • Whitehaven Coal
  • Alumina
  • Myer
  • Lynas
  • Drillsearch
  • Bluescope Steel
  • Recall Holdings
  • Orica
  • Greencross
  • Sims Metal
  • Mount Gibson Iron
  • Pact Group Holdings
  • Resolute Mining
  • GUD Holdings
  • McMillan Shakespeare
  • Metcash
  • Buru Energy
  • Nine Entertainment
  • Arrium
  • Primary Health Care
  • Northern Star Resources
  • Sigma Pharmaceutricals
  • Karoon Gas
  • Newcrest Mining
  • Horizon Oil
  • Ramsay Health Care
  • Village Roadshow
  • CSL
  • Cabcharge Australia
  • Ozforex Group
  • Sundance Energy
  • Ainsworth Game
  • Medusa Mining
  • Caltex
  • Bendigto and Adelaide Bank
  • APA Group

THE COMPANIES HARDEST HIT, IN ORDER

  • G8 Education
  • Kathmandu
  • GrainCorp
  • Leighton Holdings
  • ALS Limited
  • TPG Telecom
  • Seek
  • WorleyParsons
  • Boral
  • Qube
  • Cardno Limited
  • Independence Group
  • JB Hi-Fi
  • Veda Group
  • Wotif
  • Bank of Queensland
  • Lend Lease
  • SKY Network
  • Evolution Mining
  • Fletcher Building
  • Iluka Resources
  • Premier Investments
  • Seven Network
  • Transfield
  • UGL Limited
  • Nufarm
  • Aristocrat Leisure
  • Carsales.com.au
  • Senex Energy
  • Trade Me
  • The Reject Shop
  • Ardent Leisure
  • Drillsearch
  • Harvey Norman
  • Skilled Group
  • Sundance Energy
  • AMP
  • Monadelphous Group
  • ANZ

With ProShares Geared ETFs, get exposure to indexes in these categories:

MarketCap | Style | Sector | International | Fixed Income | Commodity | Currency

  Index/Benchmark UltraPro Short -3x UltraShort -2x Short
-1x
Ultra
2x
UltraPro
3x
MarketCap S&P 500 SPXU SDS SH SSO UPRO
Russell 3000
TWQ
UWC
NASDAQ-100 SQQQ QID PSQ QLD TQQQ
Dow Jones Industrial Average SDOW DXD DOG DDM UDOW
S&P MidCap 400 SMDD MZZ MYY MVV UMDD
S&P SmallCap 600
SDD SBB SAA
Russell 2000 SRTY TWM RWM UWM URTY
Style Russell 1000 Value
SJF
UVG
Russell 1000 Growth
SFK
UKF
Russell Midcap Value
SJL
UVU
Russell Midcap Growth
SDK
UKW
Russell 2000 Value
SJH
UVT
Russell 2000 Growth
SKK
UKK
Sector Dow Jones U.S. Basic Materials
SMN SBM UYM
NASDAQ Biotechnology
BIS
BIB
Dow Jones U.S. Consumer Goods
SZK
UGE
Dow Jones U.S. Consumer Services
SCC
UCC
Dow Jones U.S. Financials FINZ SKF SEF UYG FINU
Dow Jones U.S. Health Care
RXD
RXL
Dow Jones U.S. Industrials
SIJ
UXI
Dow Jones U.S. Oil & Gas
DUG DDG DIG
Dow Jones U.S. Real Estate
SRS REK URE
KBW Regional Banking
KRS KRU
Dow Jones U.S. Semiconductors
SSG
USD
Dow Jones U.S. Technology
REW
ROM
Dow Jones U.S. Select Telecommunications
TLL
LTL
Dow Jones U.S. Utilities
SDP
UPW
International MSCI EAFE
EFU EFZ EFO
MSCI Emerging Markets
EEV EUM EET
FTSE Developed Europe
EPV
UPV
MSCI Pacific ex-Japan
JPX
UXJ
MSCI Brazil 25/50
BZQ
UBR
FTSE China 50
FXP YXI XPP
MSCI Japan
EWV
EZJ
MSCI Mexico IMI 25/50
SMK
UMX
Fixed Income Barclays U.S. 20+ Year Treasury Bond TTT TBT TBF UBT
Barclays U.S. 7-10 Year Treasury Bond
PST TBX UST
Barclays U.S. 3-7 Year Treasury Bond
TBZ
Barclays U.S. TIPS (Series-L)
TPS
Markit iBoxx $ Liquid High Yield
SJB UJB
Markit iBoxx Liquid Investment Grade
IGS IGU
Commodity Bloomberg Commodity
CMD
UCD
Bloomberg WTI Crude Oil Subindex
SCO
UCO
Bloomberg Natural Gas Subindex
KOLD
BOIL
London p.m. Gold Fixing
GLL
UGL
London Silver Price
ZSL
AGQ
Currency EUR/USD 4:00 p.m. ET exchange rate
EUO EUFX ULE
AUD/USD 4:00 p.m. ET exchange rate
CROC
GDAY
JPY/USD 4:00 p.m. ET exchange rate
YCS
YCL

Read about ProShares UltraPro ETFs
Read about using ETFs to hedge bond risk

ETFs To Bet (Hedge) Against The Euro

  • Shorting the euro is traditionally accomplished by borrowing a set number of euros and immediately exchanging them for a different currency with the goal of repurchasing it at a lower relative valuation.
  • The easiest way to short sell the euro is by using ETFs with built-in leverage, since the currency markets require significant leverage and expertise.

The two most common ETFs to short the euro are:

  • ProShares UltraShort Euro ETF (NYSE: EUO)
  • Market Vectors Double Short Euro ETN (NYSE: DDR)

Though EUFX becomes the first -1x Euro ETF, there are a handful of products that can be used to hedge against the struggling currency. As mentioned above, ProShares already offers an ETF (EUO)
(ProShares UltraShort Euro seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the U.S. Dollar price of the Euro.)

that delivers -2x daily exposure to the euro. PowerShares additionally offers a USD Index Bullish (EUFX – Short Euro) (This ETF seeks to track the inverse of the U.S. dollar price of the euro. )that seeks to replicate being long the U.S. dollar relative to a basket of developed market currencies, including the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. Because the Euro represents a significant portion of the underlying basket, UUP often depends primarily on that currency.

One indirect way to hedge against a decline in the euro is the MSCI EAFE Currency Hedged Equity Fund (DBEF), which offers exposure to a basket of developed market stocks that includes a number of European economies. Unlike funds such as EFA or VEA, however, DBEF strips out the exchange rate exposure, meaning that a decline in the value of the euro won’t have an adverse impact on U.S. investors.

Here are four ETFs that are long the euro:

  • CurrencyShares Euro Trust (NYSE: FXE)
  • WisdomTree Dreyfus Euro (NYSE: EU)
  • Ultra Euro ProShares (NYSE: ULE)
  • Market Vectors Double Long Euro ETN (NYSE: URR)

There are a number of ETFs that allow investors to bet on an appreciation of the euro relative to the greenback, including FXE, ERO, and URR (2x)(As the Index is two-times leveraged, for every 1% strengthening of the euro relative to the U.S. dollar, the level of the Index will generally increase by 2%, while for every 1% weakening of the euro relative to the U.S. dollar, the Index will generally decrease by 2%. ).

The EURO STOXX 50 is a leading index of Europe’s blue chip companies owned by the Deutsche Borse, Dow Jones and SWX Group. Similar to the Dow Jones 30 index in the U.S., the EURO STOXX 50 includes 50 blue chip stocks across 12 eurozone countries. International investors can trade the index via exchange-traded funds (ETFs), futures contracts and stock options.

Components of the EURO STOXX 50 index are selected based on a number of criteria and weighted according to free-float market capitalization. Index members are also reviewed annually in September in order to ensure a transparent and up-to-date basket.

Stocks CFD Trading,Leveraged, Live. Desktop Or Mobile, Free App.
Forex Trading – Tight Spreads. Leverage 100:1 . Sign Up Now!
Start FX Trading on Currencies. Powerful Trading Platforms.

Invest in EURO STOXX 50 with ETFs

Exchange-traded funds (ETFs) represent the easiest way to invest in the EURO STOXX 50. Unlike mutual funds, ETFs can be bought and sold like traditional stocks and usually have lower management fees. More advanced investors can also purchase call or put options on the ETF in order to speculate or hedge.

The two most popular EURO STOXX 50 ETFs are:

  • SPDR EURO STOXX 50 ETF (NYSE: FEZ)
  • iShares EURO STOXX 50 ETF (NYSE: EUE)

Alternatively, advanced investors can purchase EURO STOXX 50 index futures or options directly through the certain exchanges like the Eurex. Index futures (Symbol FESX) can be purchased for up to nine months, while index options (Symbol OESX) can be purchased up to 119 months.

EURO STOXX 50 Trading Strategies

The EURO STOXX 50 is a very popular index for speculative traders and geopolitical investors, since the market views it as a critical gauge of Europe’s overall health. As a result, many traders and investors buy and sell the stock as a way to speculate on Europe’s overall economic health.

Here are some common trading strategies for the EURO STOXX 50:

  • Very Bullish. Consider purchasing out-of-the-money call options on EURO STOXX 50 ETFs in order to apply maximum leverage towards any upside.
  • Bullish. Consider purchasing EURO STOXX 50 ETFs and perhaps protective puts on the ETFs in order to limit any potential downside.
  • Bearish. Consider short-selling EURO STOXX 50 ETFs or purchasing at-the-money puts that appreciate when the ETFs’ price declines.
  • Very Bearish. Consider purchasing out-of-the-money puts on EURO STOXX 50 ETFs in order to apply maximum leverage towards any downside.

When trading with stock options, investors should remember that they can lose their entire investment. Moreover, investors may be required to apply to short sell (e.g. margin trade), trade options or trade futures with their brokers due to their increased risk.

Alternatives to the EURO STOXX 50

International investors looking for exposure to more than just the 50 stocks on the EURO STOXX 50 index have several alternatives. Several indices and ETFs offer similar to expanded exposure to Europe, while international investors can also build their own portfolio of foreign stocks.

Some popular indices include:

  • S&P Euro & Euro 350 Indices
  • MSCI Europe Large Cap & EMU Indices

Some popular European ETFs trading these indices include:

  • Vanguard MSCI Europe ETF (NYSE: VGK)
  • iShares S&P Europe 350 Index (NYSE: IEV)
  • iShares MSCI EMU Index (NYSE: EZU)

Investors can also purchase many large individual European stocks on U.S. exchanges via American Depository Receipts (ADRs). These securities can be bought and sold like traditional stocks, but may have less liquidity than most U.S. blue chip stocks.

Some popular European ADRs include large companies like:

  • Nokia Corporation (NYSE: NOK)
  • Banco Santender SA (NYSE: STD)
  • ArcelorMittal (NYSE: MT)

Key Points to Remember about EURO STOXX 50

  • The EURO STOXX 50 index is comprised of 50 large companies located in 12 eurozone countries and is similar to the Dow Jones 30 in the United States.
  • The EURO STOXX 50 index is often used as a barometer of Europe’s economy, which means there are many trading strategies available.
  • There are many viable alternatives to the EURO STOXX 50 index, ranging from ETFs to ADRs, that investors can consider.

There are a slew of country and region specific funds and some areas have more than others, so that’s what makes this list so important. Research which funds for which areas are the best for your investment strategy

Africa ETFs

  • AFK – Market Vectors Africa ETF
  • EZA – iShares MSCI South Africa Index ETF
  • GAF – SPDR S&P Emerging Middle East & Africa ETF

 

Argentina ETFs

  • ARGT – Global X FTSE Argentina 20 ETF

 

Andean ETFs

  • AND – Global X FTSE Andean 40 ETF

 

Asia ETFs

  • AAXJ – iShares MSCI All Country Asia ex Japan Index ETF
  • ADRA – BLDRS Asia 50 ADR Index ETF
  • ALD – WisdomTree Asia Local Debt Fund
  • AIA – iShares S&P Asia 50 Index ETF
  • ASEA – Global X FTSE ASEAN 40 ETF
  • AXJS – iShares MSCI All Country Asia ex Japan Small Cap Index Fund
  • AYT – Barclays GEMS Asia-8 ETN
  • DND – WisdomTree Pacific ex-Japan Total Dividend ETF
  • DNH – WisdomTree Pacific ex-Japan Equity Income ETF
  • EPP – iShares MSCI Pacific ex-Japan ETF
  • FPA – First Trust Asia Pacific Ex-Japan AlphaDex Fund
  • GMF – SPDR S&P Emerging Asia Pacific ETF
  • GSAX – ALPS/GS Momentum Builder Asia ex-Japan Equities and U.S. Treasuries Index ETF
  • IFAS – iShares FTSE EPRA/NAREIT Developed Asia Index ETF
  • JPX – UltraShort MSCI Pacific ex-Jpn ProShares ETF
  • PAF – PowerShares FTSE RAFI Asia Pacific ex-Japan ETF
  • PGD – Barclays Asian & Gulf Currency Reval ETN
  • TOK – iShares MSCI Kokusai Index ETF
  • UXJ – Ultra MSCI Pacific Ex-Japan
  • VPL – Vanguard Pacific Stock ETF

 

Australia ETFs

  • AUSE – WisdomTree Australia Dividend Fund
  • AUD – Australia Bond Index Fund
  • EWA – iShares MSCI Australia Index ETF
  • FAUS – First Trust Australia AlphaDex Fund
  • FXA – CurrencyShares Australian Dollar Trust ETF
  • KROO – IQ Australia Small-Cap ETF
  • GDAY – ProShares Ultra Australian Dollar ETF
  • CROC – ProShares UltraShort Australian Dollar ETF

 

Austria ETFs

  • EWO – iShares MSCI Austria Investable Mkt Index ETF

 

Belgium ETFs

  • EWK – iShares MSCI Belgium Investable Market Index ETF

 

Brazil ETFs

  • BRAQ – Global X Brazil Consumer ETF
  • BRAZ – Global X Brazil Mid Cap ETF
  • BRF – Market Vectors Brazil Small-Cap ETF
  • BRZU – Direxion Daily Brazil Bull 3X Shares ETF
  • BRZS – Direxion Daily Brazil Bear 3X Shares
  • BZQ – UltraShort MSCI Brazil ProShares ETF
  • DBBR – DBX Brazil Currency-Hedged Equity Fund
  • EWZ – iShares MSCI Brazil Index ETF
  • EWZS – iShares MSCI Brazil Small-Cap Index Fund
  • FBZ – First Trust Brazil AlphaDex Fund
  • UBR – Ultra MSCI Brazil ETF

 

BRIC ETFs

  • BIK – SPDR S&P BRIC 40 ETF
  • BKF – iShares MSCI BRIC Index ETF
  • EEB – Claymore/BNY Mellon BRIC ETF
  • EWBK – Rydex Russell BRIC Equal Weight ETF

 

Cananda ETFs

  • CAD – Pimco Canada Bond Index Fund
  • CNDA – IQ Canada Small-Cap ETF
  • CNPF – Global X Canada Preferred ETF
  • DBCN – DBX MSCI Canada Currency-Hedged Fund
  • ENY – Claymore/SWM Canadian Energy Income ETF
  • EWC – iShares MSCI Canada Index ETF
  • FCAN – First Trust Canada AlphaDex Fund
  • FXC – CurrencyShares Canadian Dollar Trust ETF
  • TSXV – Global X S&P-TSX Venture Canada 30 ETF

 

Chile ETFs

 

China ETFs

  • CHIB – Global X China Technology ETF
  • CHIE – Global X China Energy ETF
  • CHII – Global X China Industrials ETF
  • CHIM – Global X China Materials ETF
  • CHIQ – Global X China Consumer ETF
  • CHIX – Global X China Financials ETF
  • CHXX – China Infrastructure Index ETF
  • CN – db X-trackers Harvest MSCI All China Equity Fund
  • CNY – Market Vectors Renminbi/USD ETN
  • CYB – WisdomTree Dreyfus Chinese Yuan ETF
  • CZI – Dixerion Daily China Bear 3x Shares ETF
  • CZM – Dixerion Daily China Bull 3x Shares ETF
  • DSUM – PowerShares Chinese Yuan Dim Sum Bond Portfolio
  • ECNS – iShares MSCI China Small-Cap Index Fund
  • EWGC – Rydex Russell Greater China Large Cap Equal Weight ETF
  • FCA – First Trust China AlphaDex Fund
  • FCHI – iShares FTSE China (HK Listed) Index ETF
  • FXI – iShares FTSE/Xinhua China 25 Index ETF
  • FXP – UltraShort FTSE/Xinhua China25 Proshares ETF
  • GXC – SPDR S&P China ETF
  • HAO – Claymore/AlphaShares China Small Cap ETF
  • KBA – KraneShares Bosera MSCI China A Share ETF
  • KFYP – KraneShares CSI China Five Year Plan ETF
  • KWEB – KraneShares CSI China Internet ETF
  • MCHI – iShares MSCI China Index Fund
  • PEK – Market Vectors China ETF
  • PGJ – PowerShares Golden Dragon Halter USX China
  • RMB – Guggenheim Yuan Bond ETF
  • TAO – Claymore/AlphaShares China Real Estate ETF
  • TCHI – RBS China TrendPilot ETN
  • XPP – Ultra FTSE/Xinhua China 25 ProShares ETF
  • YAO – Claymore/AlphaShares China All-Cap ETF
  • YXI – Proshares Short FTSE / Xinhua China 25 ETF

 

Colombia ETFs

  • GXG – Global X/InterBolsa FTSE Colombia 20 ETF
  • COLX – Market Vectors Colombia ETF

 

Denmark ETFs

  • EDEN – iShares MSCI Denmark Capped Investable Market Index ETF

 

Egypt ETFs

  • EGPT – Market Vectors Egypt Index ETF

 

Europe ETFs

  • ADRU – BLDRS Europe 100 ADR Index ETF
  • DFE – WisdomTree Europe SmallCap Dividend ETF
  • DRR – Market Vectors Double Short Euro ETN
  • EPV – UltraShort MSCI Europe ProShares ETF
  • ERO – iPath EUR/USD Exchange Rate ETN
  • ESR – iShares MSCI Emerging Markets Eastern Europe Index ETF
  • EU – WisdomTree Dreyfus Euro ETF
  • EUFN – iShares MSCI Europe Financials Sector Index Fund
  • EUO – UltraShort Euro ProShares ETF
  • FEP – First Trust Europe AlphaDex Fund
  • FEZ – SPDR DJ EURO STOXX 50 ETF
  • FXE – CurrencyShares Euro Trust ETF
  • GUR – SPDR S&P Emerging Europe ETF
  • IEV – iShares S&P Europe 350 Index ETF
  • IFEU – iShares FTSE EPRA/NAREIT Developed Europe Index ETF
  • ULE – Ultra Euro ProShares ETF
  • UPV – Ultra MSCI Europe ETF
  • VGK – Vanguard European ETF

 

Far East ETFs

  • FEFN – iShares MSCI Far East Financials Sector Index Fund

 

Finland ETFs

  • EFNL – iShares MSCI Finland Capped Investable Market Index ETF

 

France ETFs

  • EWQ – iShares MSCI France Index ETF

 

Germany ETFs

  • BUND – Pimco Germany Bond Index Fund
  • BUNT – PowerShares DB 3x German Bund Futures ETN
  • BUNL – PowerShares DB German Bund Futures ETN
  • EWG – iShares MSCI Germany Index ETF
  • FGM – First Trust Germany AlphaDex Fund
  • GERJ – Germany Small-Cap ETF
  • GGOV – ProShares German Sovereign/Sub-Sovereign ETF

 

Greece ETFs

  • GREK – Global X FTSE Greece 20 ETF

 

Hong Kong ETFs

  • EWH – iShares MSCI Hong Kong Index ETF
  • EWHS – iShares MSCI Hong Kong Small Cap Index ETF
  • FHK – First Trust Hong Kong AlphaDex Fund

 

India ETFs

  • EPI – WisdomTree India Earnings ETF
  • FNI – First Trust ISE Chindia ETF
  • ICN – WisdomTree Dreyfus Indian Rupee ETF
  • INCO – Emerging Global India Infrastructure ETF
  • INDL – Direxion Daily India Bull 3x Shares ETF
  • INDY – iShares S&P India Nifty Fifty Index ETF
  • INP – iPath MSCI India Index ETN
  • INR – Market Vectors Rupee/USD ETN
  • INXX – EGShares India Infrastructure ETF
  • PIN – PowerShares India ETF
  • SCIF – Market Vectors India Small-Cap Index ETF
  • SCIN – Emerging Global Shares Indxx India Small Cap ETF
  • INDA – MSCI India Index Fund
  • SMIN – iShares MSCI India Small Cap Index Fund

 

Indonesia ETFs

  • EIDO – iShares MSCI Indonesia Investable Market Index ETF
  • IDX – Market Vectors Indonesia ETF
  • IDXJ – Market Vectors Indonesia Small-Cap ETF

 

Ireland ETFs

 

Israel ETFs

  • EIS – iShares MSCI Israel Cap Invest Market Index ETF

 

Italy ETFs

  • EWI – iShares MSCI Italy Index ETF
  • ITLT – PowerShares DB 3x Italian Treasury Bond Futures ETN
  • ITLY – PowerShares DB Italian Treasury Bond Futures ETN

 

Japan ETFs

  • DBJP – DBX MSCI Japan Currency-Hedged Equity Fund
  • DFJ – WisdomTree Japan SmallCap Dividend
  • DXJ – WisdomTree Japan Total Dividend ETF
  • EWJ – iShares MSCI Japan Index ETF
  • EWV – UltraShort MSCI Japan ProShares ETF
  • EZJ – Ultra MSCI Japan ProShares ETF
  • FJP – First Trust Japan AlphaDex Fund
  • FXY – CurrencyShares Japanese Yen Trust ETF
  • JGBS – PowerShares DB Inverse Japanese Government Bond Futures ETN
  • JGBD – PowerShares DB 3x Inverse Japanese Government Bond Futures ETN
  • JGBT – PowerShares DB 3x Japanese Govt Bond Futures ETN
  • JGBL – PowerShares DB Japanese Govt Bond Futures ETN
  • JPP – SPDR Russell/Nomura PRIME Japan ETF
  • JSC – SPDR Russell/Nomura Small Cap Japan ETF
  • JYN – iPath JPY/USD Exchange Rate ETN
  • SCJ – iShares MSCI Japan Small Cap Index ETF
  • YCL – Ultra Yen ProShares ETF
  • YCS – UltraShort Yen ProShares ETF

 

Latin America ETFs

  • BONO – Market Vectors LatAm Aggregate Bond ETF
  • FLN – First Trust Latin America AlphaDex Fund
  • GML – SPDR S&P Emerging Latin America ETF
  • ILF – iShares S&P Latin America 40 Index ETF
  • LATM – Latin America Small-Cap ETF
  • LBJ – Direxion Daily Latin America 3x Bull Shares ETF

 

Malaysia ETFs

 

Mexico ETFs

 

Middle East ETFs

 

Netherlands ETFs

  • EWN – iShares MSCI Netherlands Invstable Market Index ETF

 

New Zealand ETFs

 

Norway ETFs

  • GXF – Global X FTSE Nordic 30 ETF
  • NORW – Global X FTSE Norway 30 ETF

 

Peru ETFs

  • EPU – iShares MSCI All Peru Capped Index ETF

 

Philippines ETFs

 

Poland ETFs

  • EPOL – iShares MSCI Poland Investable Market Index Fund
  • PLND – Market Vectors Poland ETF

 

Russia ETFs

 

Singapore ETFs

  • EWS – iShares MSCI Singapore Index ETF
  • EWSS – iShares MSCI Singapore Small Cap Index ETF

 

South Korea ETFs

  • EWY – iShares MSCI South Korea Index ETF
  • FKO – First Trust South Korea AlphaDex Fund
  • HKOR – Horizons Korea KOSPI 200 ETF
  • KORU – Direxion Daily South Korea Bull 3x Shares ETF
  • KORZ – Direxion Daily South Korea Bear 3X Shares ETF
  • SKOR – IQ South Korea Small-Cap ETF- CLOSED

 

Spain ETFs

  • EWP – iShares MSCI Spain Index ETF

 

Sweden ETFs

  • EWD – iShares MSCI Sweden Index ETF
  • FXS – CurrencyShares Swedish Krona Trust ETF

 

Switzerland ETFs

  • EWL – iShares MSCI Switzerland Index ETF
  • FSZ – First Trust Switzerland AlphaDex Fund
  • FXF – CurrencyShares Swiss Franc Trust ETF
  • SGOL – ETFS Physical Swiss Gold Shares ETF

 

Taiwan ETFs

 

Thailand ETFs

  • THAI – IQ Thailand Small-Cap ETF
  • THD – iShares MSCI Thailand Invest Market Index ETF

 

Turkey ETFs

 

United Kingdom ETFs

 

Vietnam ETFs

  • VNM – Market Vectors Vietnam ETF

Price-Weighted Index vs Market Capitalization

DEFINITION of ‘Price-Weighted Index’

A stock index in which each stock influences the index in proportion to its price per share. The value of the index is generated by adding the prices of each of the stocks in the index and dividing them by the total number of stocks. Stocks with a higher price will be given more weight and, therefore, will have a greater influence over the performance of the index.
INVESTOPEDIA EXPLAINS ‘Price-Weighted Index’

For example, assume that an index contains only two stocks, one priced at $1 and one priced at $10. The $10 stock is weighted nine times higher than the $1 stock. Overall, this means that this index is composed of 90% of the $10 stocks and 10% of $1 stock.

In this case, a change in the value of the $1 stock will not affect the index’s value by a large amount, because it makes up such a small percentage of the index.

A popular price-weighted stock market index is the Dow Jones Industrial Average. It includes a price-weighted average of 30 actively traded blue chip stocks.

 

DEFINITION of ‘Market Capitalization’

The total dollar market value of all of a company’s outstanding shares. Market capitalization is calculated by multiplying a company’s shares outstanding by the current market price of one share. The investment community uses this figure to determine a company’s size, as opposed to sales or total asset figures.

Frequently referred to as “market cap.”

INVESTOPEDIA EXPLAINS ‘Market Capitalization’

If a company has 35 million shares outstanding, each with a market value of $100, the company’s market capitalization is $3.5 billion (35,000,000 x $100 per share).

Company size is a basic determinant of asset allocation and risk-return parameters for stocks and stock mutual funds. The term should not be confused with a company’s “capitalization,” which is a financial statement term that refers to the sum of a company’s shareholders’ equity plus long-term debt.

The stocks of large, medium and small companies are referred to as large-cap, mid-cap, and small-cap, respectively. Investment professionals differ on their exact definitions, but the current approximate categories of market capitalization are:

Contango is a situation where the futures price (or forward price) of a commodity is higher than the expected spot price.[1][2] In a contango situation, hedgers (commodity producers and commodity users) or arbitrageurs/speculators (non-commercial investors),[3] are “willing to pay more for a commodity at some point in the future than the actual expected price of the commodity. This may be due to people’s desire to pay a premium to have the commodity in the future rather than paying the costs of storage and carry costs of buying the commodity today.”

The opposite market condition to contango is known as normal backwardation. “A market is “in backwardation” when the futures price is below the expected future spot price for a particular commodity. This is favorable for investors who have long positions since they want the futures price to rise.”[2]

The Commission of the European Communities (CEC & 2008 6) described backwardation and contango in relation to futures prices: “The futures price may be either higher or lower than the spot price. When the spot price is higher than the futures price, the market is said to be in backwardation. It is often called “normal backwardation” as the futures buyer is rewarded for risk he takes off the producer. If the spot price is lower than the futures price, the market is in contango.”[3]

The futures or forward curve would typically be upward sloping (i.e. “normal”), since contracts for further dates would typically trade at even higher prices. (The curves in question plot market prices for various contracts at different maturities—cf. term structure of interest rates) “In broad terms, backwardation reflects the majority market view that spot prices will move down, and contango that they will move up. Both situations allow speculators (non-commercial traders)[4] to earn a profit.”[3]

A contango is normal for a non-perishable commodity that has a cost of carry. Such costs include warehousing fees and interest forgone on money tied up (or the time-value-of money, etc.), less income from leasing out the commodity if possible (e.g. gold).[5] For perishable commodities, price differences between near and far delivery are not a contango. Different delivery dates are in effect entirely different commodities in this case, since fresh eggs today will not still be fresh in 6 months’ time, 90-day treasury bills will have matured, etc.

 

CT-Contango2

 

 

The graph depicts how the price of a single forward contract will behave through time in relation to the expected future price at any point time. A contract in contango will decrease in value until it equals the spot price of the underlying at maturity. Note that this graph does not show the forward curve (which plots against maturities on the horizontal).

 

Contango is a potential trap for unwary investors. Exchange-traded funds (ETFs) provide an opportunity for small investors to participate in commodity futures markets, which is tempting in periods of low interest rates. Between 2005 and 2010 the number of futures-based commodity ETFs rose from two to ninety-five, and the total assets rose from 3.9 to nearly 98 billion USD in the same period.[6] Because the normal course of a futures contract in a market in contango is to decline in price, a fund composed of such contracts buys the contracts at the high price (going forward) and closes them out later at the usually lower spot price. The money raised from the low priced, closed out contracts will not buy the same number of new contracts going forward. Funds can and have lost money even in fairly stable markets. There are strategies to mitigate this problem, including allowing the ETF to create a stock of precious metals for the purpose of allowing investors to speculate on fluctuations in its value. But storage costs will be quite variable, and copper ingots require considerably more storage space, and thus carrying cost, than gold, and command lower prices in world markets: it is unclear how well a model that works for gold will work with other commodities.[6] Industrial scale buyers of major commodities, particularly when compared to small retail investors, retain an advantage in futures markets. The raw material cost of the commodity is only one of many factors that influence their final costs and prices. Contango pricing strategies that catch small investors by surprise are intuitively obvious to the managers of a large firm, who must decide whether to take delivery of a product today, at today’s spot price, and store it themselves, or pay more for a forward contract, and let someone else do the storage for them.[7]

The contango should not exceed the cost of carry, because producers and consumers can compare the futures contract price against the spot price plus storage, and choose the better one. Arbitrageurs can sell one and buy the other for a theoretically risk-free profit (see rational pricing—futures). The EU describes the two groups of players in the commodity futures market, hedgers (commodity producers and commodity users) or arbitrageurs/speculators (non-commercial investors).[3]

If there is a near-term shortage, the price comparison breaks down and contango may be reduced or perhaps even reverse altogether into a state called backwardation. In that state, near prices become higher than far (i.e., future) prices because consumers prefer to have the product sooner rather than later (see convenience yield), and because there are few holders who can make an arbitrage profit by selling the spot and buying back the future. A market that is steeply backwardated—i.e., one where there is a very steep premium for material available for immediate delivery—often indicates a perception of a current shortage in the underlying commodity. By the same token, a market that is deeply in contango may indicate a perception of a current supply surplus in the commodity.

In 2005 and 2006 a perception of impending supply shortage allowed traders to take advantages of the contango in the crude oil market. Traders simultaneously bought oil and sold futures forward. This led to large numbers of tankers loaded with oil sitting idle in ports acting as floating warehouses.[8] (see: Oil-storage trade) It was estimated that perhaps a $10–20 per barrel premium was added to spot price of oil as a result of this.

If such is the case, the premium may have ended when global oil storage capacity became exhausted; the contango would have deepened as the lack of storage supply to soak up excess oil supply would have put further pressure on spot prices. However, as crude and gasoline prices continued to rise between 2007 and 2008 this practice became so contentious that in June 2008 the Commodity Futures Trading Commission, the Federal Reserve, and the U.S. Securities and Exchange Commission (SEC) decided to create task forces to investigate whether this took place.[9]

A crude oil contango occurred again in January 2009, with arbitrageurs storing millions of barrels in tankers to profit from the contango (see oil-storage trade). But by the summer, that price curve had flattened considerably. The contango exhibited in Crude Oil in 2009 explains the discrepancy between the headline spot price increase (bottoming at $35 and topping $80 in the year) and the various tradeable instruments for Crude Oil (such as rolled contracts or longer-dated futures contracts) showing a much lower price increase.[10] The USO ETF also failed to replicate Crude Oil’s spot price performance.