The demand for a finite natural resources and long-term weakness in the U.S. dollar are major market themes. Commodity exchange traded fund investors can take advantage of the daily price changes that reflect the tug-of-war between supply and demand or take on a long-term macroeconomic view.
“Historically, commodities have maintained very low correlations to equities and bonds and high correlation to inflation,” according to Morningstar analyst Abraham Bailin. “Longer-term performance of the asset class indicates that commodities remain a good portfolio diversifier.”
Additionally, further economic expansion, notably in the emerging markets, along with the expanding global population, will generate greater demand for our planet’s raw resources. [List of Silver ETFs]
“The U.N. projects an 11% global population increase by 2020 and a 20% increase by 2030,” Bailin added. “At the same time, the global middle class’ surging growth will compound demand for food and energy as diets and transportation habits become more like the West’s.”
Currently, the S&P GSCI Commodity Index is rising to a six-month high as commodities futures gain on the improved U.S. economic outlook and optimism over the Greece bailout, according to Bloomberg. [List of Top Gold ETFs]