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Investors, rather than traders, have had the advantage in the commodities markets this year. Largely, that's because stockholders can outlast highly leveraged futures traders while waiting for a trend to develop. Of course, you can always use an exchange-traded fund (ETF) as a proxy for futures to insulate yourself from margin calls. Even when comparing commodity ETFs to commodity stock ETFs, though, equities have maintained a performance edge this year. For example, the bullish trend exhibited by the Market Vectors RVE Hard Assets Producers ETF (NYSE Arca: HAP) has been stronger, for the most part, than that of the GreenHaven Continuous Commodity Index (NYSE Arca: GCC). As of Friday, HAP has climbed 26.8% for the year, while GCC's gained but 6.8%. A new high, in fact, in the price ratio was scored by HAP over GCC last Friday. Commodity Stocks (HAP) vs. Commodities (GCC) 
A great part of the outperformance stems from the drag on the GCC portfolio created by contango. Contango represents the futures pricing phenomenon when later deliveries trade at a premium to nearby contracts. Every time the GCC portfolio rolls futures positions forward in a contango market, it's forced to buy high and sell low and, consequently, take losses that eat into returns. Contango for most storable commodities persists when there's more than adequate supply. Put another way, you're more likely to see contango when demand is slack. So, is HAP's outperformance likely to wane if a speculative interest in futures heats up? Well, perhaps. Turning around the contango ship takes time, however. Meanwhile, HAP is well on its way to retrace the losses sustained after its late 2008 launch. Getting above the $30.83 mark puts HAP shares on target to check the June reaction high of $33.66. If that level can be held, the commodity stock ETF could develop some real legs. *Note: To provide a longer-term perspective, we've pushed back the base for our real-time monetary inflation indicator to May 2006. The base previously was January 2008. The indicator represents the average annual rate of monetary inflation over the period. The current 12-month inflation rate is -0.2%.
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