Many analysts and investors alike are bullish on the commodity cycle and believe that it will continue. In fact, exchange traded funds (ETFs) are being cited as a possible driving force for increasing demand.
Citi’s Alan Heap believes that the commodity super cycle will continue regardless of whether another global slowdown occurs, and ETFs could at least in part help drive the demand.
These days, gold ETFs account for 90% of the entire commodity ETF market. Vincent Fernando for Business Insider reports that gold ETF flows surged during the market crisis, then plateaued and now have ticked back up. [How the Oil Spill Affects Related ETFs.]
We also recently witnessed what happened when the extremely popular ETFS Physical Platinum (NYSEArca: PPLT) fund launched – it quickly drove prices for the precious metal higher. [ETN a Different Way to Play Commodities.]
ETFs won’t be wholly responsible for the uptick in commodity demand, of course. The commodity-driven cycle should be heavily aided by the growing consumption seen in various emerging and developed markets as well as the general cycles of supply and demand. [What Jim Rogers is Betting On.]