New Commodity Companies Index (CCI) Tells it ALL!

By Lorimer Wilson        Nov 4 2009 4:24PM www.preciousmetalswarrants.com

The big picture in the performance of commodity-related company stocks has been an unknown until the introduction of the new Commodity Companies Index (CCI). Up until now investors, analysts and newsletter writers had either concentrated on the price performance of the commodities themselves (such as gold, silver and crude oil), the Reuters CRB Commodity Index or on the HUI, XAU, GDM or CDNX indices believing that such knowledge would make them as well informed as possible regarding the health, performance and trends in commodities. Well, that was then and this is now and the addition of the CCI and its sub-component, the GSCI, now provide much greater insight into the commodity sector than ever before.

I mentioned in a previous article entitled “Introducing the New ‘Gold and Silver Companies Index’ (GSCI) that, while the GSCI is restricted to only gold and silver companies with associated warrants that trade on the U.S. and Canadian stock exchanges, it is a marked improvement over the large-cap centric the HUI, XAU and, to a lesser extent, the GDM indices, and the nano-cap centric and less commodity-oriented CDNX index.

The situation is similar with the new Commodity Companies Index (CCI) in that, while it is restricted to only commodity-related companies which also have associated warrants that trade on the U.S. and Canadian stock exchanges, it has a much more diverse representation of the health of the companies in the commodity sector than any other index in existence (if any).

Let me explain. The CCI is a broadly diversified index made up of 20 companies in the production, development and/or exploration of gold and silver or as royalty payment participants; 10 companies engaged in the mining and/or development/exploration of uranium, coal, iron ore, zinc, cobalt, molybdenum, lead, copper or nickel; 3 venture capital ‘banks’ specializing in commodity-related financing and 2 companies involved in oil and gas production. Talk about an all-inclusive cross-section of companies involved in the commodity business. In addition to product diversification these companies have a broad market capitalization spectrum with 11% large-cap, 11% mid-cap, 11% small-cap and 66% micro/nano-cap constituents.

Indeed, the CCI tells it ALL! The actual constituent/component companies can be accessed at: www.preciousmetalswarrants.com/FreeBasicDatabase.htm

Below is a table that differentiates the performance of the major commodities and related indices which sheds considerable light on the performance of the commodity companies as a sector (i.e. the CCI) vis-à-vis the other categories:

Last Week’s % Performance

All calculations are based on U.S. dollar equivalents
(1) Week ending October 30th, 2009

Sources: preciousmetalswarrants.com (warrant and stocks-with-warrants data), oanda.com (exchange rates) and stockcharts.com (index and commodity prices).

There you have it! Finally, a better way to analyze the performance of companies involved in commodity related activities be it precious metals, base metals, oil and gas production or venture capital merchant banks. No longer need we rely on the HUI, the CDNX and the CRB for our understanding of what is happening in the commodities sector. Now we have a much broader picture.

Lorimer Wilson

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Lorimer Wilson is Editor of www.MunKnee.com and Director of Marketing for the two sites mentioned below. He can be contacted at Lorimer@preciousmetalswarrants.com.

1. www.PreciousMetalsWarrants.com provides a free one-of-a-kind database (updated weekly) on all commodity-related warrants trading on exchanges in the United States and Canada. PMW also offers a modestly priced subscription service that ranks all warrants according to our proprietary leverage/time calculations at four projected stock price appreciation levels. You can also sign up for a free weekly email highlighting events in the precious metals marketplace and in the wonderful world of warrants in particular.
2. www.InsidersInsights.com, another modestly priced subscription service, alerts subscribers as to when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.