Washington, Speculators and Supply and Demand All Affect Commodities and ETFs | ETF Trends

Commodities investors have had the great option of using exchange traded funds (ETFs) to get easy and efficient access in one single transaction. Now insiders are wondering if money-making commodities can continue their golden run and which ETF to choose from out of the ever-growing pool of choices.

In the past year through April 24, the Dow Jones Industrials was down 0.8% and the S&P 500 was down 6.2%. In that same timeframe, the Dow Jones AIG Commodity Index ETN (DJP) was up 16.9%.

Can commodities actually keep up the pace? Despite last month’s correction, some economists believe that prices will stay strong, reports Joshua Lipton for Forbes. The real clues to their direction mostly hinge on what happens with the Federal Reserve. The number one driver of commodities, according to Brian Wesbury, chief economist at First Trust Porfolios, is monetary policy.

If the Fed continues to make rate cuts, look for the sentiment on commodities to remain bullish.

No doubt supply and demand is a factor, too. Kevin Kerr, president of Kerr Trading International, points to the rising middle class that’s seeking out better food and higher-quality meats.