Why There Could Be a Commodity ETF Resurgence | ETF Trends

Everybody needs stuff, and the most basic of which is commodities. Could it be a matter of time before we see the resurgence of commodities and related exchange traded funds (ETFs)?

Economic improvements will result in increased demand for “stuff,” and producers are currently reducing their supplies. What would result is a situation where demand will soon out strip supply, which leads to increased prices, remarks Gary Gordon for ETF Expert.

What’s more, countries around the world are printing money and this usually leads to devalued currencies along with inflation. There will be a need to hedge against potential inflation.

The availability and popularity of commodity ETFs are steadily growing. More people are using commodities and related ETFs as a source of wealth creation. Even Jim Rogers, a renowned commodities bull, still advocates the potential in commodities based on the simple fact that people consume.

Total commodity tracking indexes such as PowerShares DB Commodity Idx Trking Fund (DBC), which is currently down 2.9% in the last month and down 10.4% in the last three months, have fallen around 60% from their highs. Could this indicate that commodities ETFs are oversold? In any case, it should be noted that commodities aren’t likely to move higher until major economies patch themselves up. There may even be more regulatory actions to prevent speculative bubbles like the ones we’ve seen in the past.

ETF DBC performance

You may also want to discuss Commodity ETFs in our forums.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.