Commodities Indicies Rebalancing

The major commodities indicies are being rebalanced again, which made me decide to sell a bunch of gold shares at around 860 knowing that most indicies would be reducing their gold exposure because of its strong performance in ‘08. Barry Ritholtz is questioning the timing of this rebalancing as well as the last one in 2006.

"...I have no clue what the motivation is for these moves, nor do I knows what what they were in 2006. But they are looking increasingly curious and ill timed. Once is a coincidence. Twice makes you pay close attention. After the third such move, expect to see the index managers dragged before a  Congressional panel..."

Being aware of these kinds of events in advance is the kind of ninja move that really makes the difference– I sold at 860, and will re-buy at around 810. This means I get more ounces for the same money. However, I hadn’t really considered that this isn’t something that’s done on a consistent schedule. Why not do it annually, or quarterly? Rebalancing inconsistently seems sketchy.

Interesting stuff– thanks to reader “Alfred” for the link. (See also: All that glitters is not gold. Photo credit artemuestra.)