On December 20, we noted that since 2016 began, the Dow Jones U.S. Aluminum Index -- which tracks the future prices of aluminum – had jumped about 70% and that the run was far from over.
After years of oversupply issues and supply-demand imbalances, those issues has just about stabilized, in our opinion. And because of that, we also noted, we could see an even bigger increase in aluminum prices, as Donald Trump’s infrastructure plans help ramp up demand for the metal.
One of the stocks recommended in that Chart of Day was Century Aluminum (CENX) – which at the time priced at just $8.65. It’s now up to $11.52 and running. If you’re happy with the gain, consider exiting half here and allow the other half to run.
At the same time, the Dow Jones Aluminum Index ran from a low of $95.20 to $105.45. And the run is far from over especially as hedge funds take interest.
In December 2016, hedge funds boosted their total net long positions in more than a dozen commodities by close to 9.7%. That’s a sizable jump from the year prior when many funds were net short.
They’re now bullish on oil, soybeans, copper, aluminum and cotton, for instance.
“After five straight years of losses, raw materials rebounded as supply gluts receded for metals and energy. There’s a growing chorus of voices that says the rally isn’t over,” noted Bloomberg. “Citigroup Inc., the bank that was ahead of the game back in 2012 when analysts declared the end of the super cycle of rising demand and price, now predicts that most commodities will perform strongly in 2017 as global economic growth picks up.”
“Goldman Sachs Group Inc. in November recommended an overweight position for the asset class for the first time in more than four years.”