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Everyone Hates Coal, Yet the Coal ETF is Up 86% This Year

Thursday, September 22, 2016 9:09
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(Before It's News)

The world’s most hated commodity keeps receiving more and more bad news, but yet the VanEck Vectors Coal ETF (NYSE:KOL) has outperformed the vast majority of all funds in 2016.

You don’t need to look very far these days to find an article panning coal. just published a sobering look at how dire the industry outlook is getting:

This week saw another slew of investors officially back away from coal funding. Led by South Africa’s FutureGrowth — the country’s largest specialist fixed-income money manager.

FutureGrowth said Tuesday that based on its investing principles it could no longer fund “dirty” coal projects. A sentiment that was echoed this week by Boston University, which said it will divest all holdings in coal and oil sands.

Meanwhile, Bloomberg reports that final domino in the death of the once-mighty coal industry in America is about to fall:

The last bastion of the American coal industry has been breached.

The bust that’s devastated Appalachia for five years has finally reached cowboy country’s Powder River Basin. For four decades, the 300-mile corridor stretching from Wyoming north into Montana thrived on the strength of the cleaner low-sulfur coal carved from its vast plains. No more.

Lost in the sea of negative reports is the fact that premium hard coking coal prices have more than doubled in the past six weeks alone. But this short-term trend is just part of a larger story playing out in the coal space throughout this year.

The only coal-focused ETF of any consequence, KOL, is up almost 87% year-to-date, in a bounce that is beginning to rival even the much-vaunted gold miner and silver miner recoveries.

But let’s not compare coal to precious metals in terms of future outlooks. Coal is absolutely dying a slow death, but that doesn’t mean it won’t still exist as a major global energy source for several more decades. So instead, let’s look at KOL versus its peers in the Energy Equities space:

(Click to see full sector returns, ratings, and more)

As you can see above, KOL has more than doubled the return of the next closest comparable fund this year. So despite its terminal illness, we can all probably agree to postpone coal’s funeral for another few months.

KOL shares were on the rise again today, up $0.13 (+1.13%) to $11.61 in Thursday morning trading.


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