Investors looking to profit in the commodities market need to be selective, as the performance of different assets can vary widely. The year-to-date returns of ETFs tracking gold, silver, copper, crude oil, palladium, and natural gas show this disparity. The iShares Silver Trust (SLV) is at the top with a gain of 23.8%, while the abrdn Physical Palladium Shares ETF (PALL) is at the bottom with a loss of 13.4%. Other ETFs like the SPDR Gold Shares ETF (GLD), United States Copper Index Fund (CPER), and United States Oil Fund (USO) are showing double-digit gains, while the United States Natural Gas Fund (UNG) is down 6.5%.
The current environment in the commodities market is more nuanced, with variations in supply and demand dynamics and investing cases for different classes of commodities. For example, copper is seen as more of an Electric Vehicle (EV) and power grid/infrastructure play, while gold is a play on potentially easier Fed policy going forward. Natural gas is influenced by various US government moves and expectations for higher electricity demand from the AI boom. It’s no longer as simple as just following overarching narratives like Chinese economic growth to drive commodity prices higher across the board.
Overall, there are opportunities for profits in commodities and the funds tracking them, but investors need to be sure they are investing in the right assets. Different factors are driving the performance of various commodities, so it’s essential to do thorough research and understand the specific dynamics affecting each commodity. Being selective in choosing which assets to invest in can help investors maximize their returns and reduce their risks in the commodities market.
