Why Is The $CRB Important?

The Thomson Reuters/Jefferies CRB Index (TR/J CRB) (thank you wikipedia) –  is a commodity price index. It was first calculated by Commodity Research Bureau, Inc. in 1957 and made its inaugural appearance in the 1958 CRB Commodity Year Book.

The Index was originally composed of 28 commodities, however there has been a continuous adjustment of the individual components used in calculating the Index since the original 28 were chosen in 1957. All of these changes have been part of the continuing effort of Thomson Reuters to ensure that its value provides accurate representation of broad commodity price trends.

The index comprises 19 commodities: Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, Silver, Soybeans, Sugar, Unleaded Gas and Wheat.

Generally commodity prices move opposite to bond prices. This is because inflation causes commodities to increase in price while devaluating the price of bonds. This is one of the reasons that the CRB is so closely watched by both bond and commodity traders. – AND BY KONG.

When you step back from the day to day “mindfield” of the SP 500 – it gets much easier to see what is “really going on” and you can trade with a greater sense of confidence. If somone asked me today “Hey Kong – do you think the price of things (commodities) on this planet are getting cheaper here moving forward? or more expensive?”

I’d have to be careful not to punch them in the face.

Watch the $CRB – It “IS” Important.

5 Responses

  1. Timothy Ames November 10, 2012 / 8:55 pm

    Greetings from Hawaii,

    In your opinion where and or who has the best $CRB chart to track, especially for a new person. Do you also look at the overall CRB as a baseline, then look at the specific items that you are interested to invest in specifically as part of that. Can I assume that you use the CRB one of the key tools in your decision making process but not the only one.

    It’s only been a few days since I signed up to the Kong blog but I am already learning and appreciating the information and knowledge that you are sharing so thank you !!

    • Pot Stock Watch November 11, 2012 / 1:15 pm

      Hi Tim.

      I track / watch this here at http://www.barchart.com/charts/stocks/$CRB.

      Yes I look at it as a “broad stroke” with respect for global demand / pricing of commodities….and its not something that I (or you) necessarily need to focus on everyday. What is important is to understand the current trend – and in my view its pretty clear – that’s up.

      I track aprox 8 million different things all day and everyday – ( ok not 8 million – but a real boatload ) and in combination – am generally able to time markets / see reversals / spot trends etc….with Kong like abilities. I will start getting into the other things I watch – as we move forward here.

  2. DojiTrader November 11, 2012 / 1:59 am

    Hi Pot Stock Watch,

    What is the difference, on Stockcharts.com, between the $CCI and $CRB? One says Reuters, the other Jefferies/Reuters. Levels are different. The latter shows EOD data only, since start of Oct 2012.

    Thanks!

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