Big Changes Underfoot In Commodities ETF And ETNs
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Posted On: 01/24/2018 9:31:13 PM
Re: JettLoneStar #7785
Big Changes Underfoot In Commodities ETF And ETNs
https://seekingalpha.com/article/4139563-big-...t-77464097
Summary
The appetite for commodities products rises with prices.
GLD is the gold standard; USO has been problematic.
Contango and backwardation are issues.
Attention to the forward curve - the Teucrium example.
Lots of changes in the weeks ahead - get educated!
Since reaching bottoms in late 2015 and early 2016, the prices of many commodities have come storming back. Economic growth around the world and optimism about the future have supported the raw material prices, particularly in the industrial sector. Metals, minerals, and the price of crude oil have moved appreciably higher over the past two years, and many remain close to recent highs. Two industrial commodities, palladium and lumber, recently posted new record-highs.
At the same time, favorable weather conditions around the world have kept a lid on the prices of many agricultural commodities, which have not participated in the latest commodities boom. However, with few exceptions over the past two decades, the prices of most agricultural products have exhibited a pattern of higher lows which is a reflection of rising demand for food around the world because of demographics.
With the stock market roaring and posting new highs on almost a daily basis, some investors are looking to diversify their portfolios. After nearly a decade of accommodative monetary policy and with an unprecedented amount of liquidity floating around the system, the fear of increasing inflationary pressures is causing many investors to turn towards the commodities market. Commodities became more mainstream instruments since the introduction of ETF and ETN products that seek to replicate the price action in the volatile and highly leveraged futures markets. ETF and ETNs have brought the opportunity for investors to participate directly in their standard investment accounts as they trade on stock exchanges. At the beginning of 2018, those companies offering these vehicles appear to be refining their offerings to prepare for more activity in the sector as demand for commodity-based investments is on the rise.
https://seekingalpha.com/article/4139563-big-...t-77464097
Summary
The appetite for commodities products rises with prices.
GLD is the gold standard; USO has been problematic.
Contango and backwardation are issues.
Attention to the forward curve - the Teucrium example.
Lots of changes in the weeks ahead - get educated!
Since reaching bottoms in late 2015 and early 2016, the prices of many commodities have come storming back. Economic growth around the world and optimism about the future have supported the raw material prices, particularly in the industrial sector. Metals, minerals, and the price of crude oil have moved appreciably higher over the past two years, and many remain close to recent highs. Two industrial commodities, palladium and lumber, recently posted new record-highs.
At the same time, favorable weather conditions around the world have kept a lid on the prices of many agricultural commodities, which have not participated in the latest commodities boom. However, with few exceptions over the past two decades, the prices of most agricultural products have exhibited a pattern of higher lows which is a reflection of rising demand for food around the world because of demographics.
With the stock market roaring and posting new highs on almost a daily basis, some investors are looking to diversify their portfolios. After nearly a decade of accommodative monetary policy and with an unprecedented amount of liquidity floating around the system, the fear of increasing inflationary pressures is causing many investors to turn towards the commodities market. Commodities became more mainstream instruments since the introduction of ETF and ETN products that seek to replicate the price action in the volatile and highly leveraged futures markets. ETF and ETNs have brought the opportunity for investors to participate directly in their standard investment accounts as they trade on stock exchanges. At the beginning of 2018, those companies offering these vehicles appear to be refining their offerings to prepare for more activity in the sector as demand for commodity-based investments is on the rise.
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