Disruptive Themes Could Fuel Commodity ETF Play

Changing market conditions and newly implemented technologies could help drive demand for raw materials and support commodities-related ETFs.

“We’re at the tipping point for a new generation of commodities driven by intertwining technologies,” Maxwell Gold, director of investment strategy at ETF Securities, said in a note.

Specifically, Gold pointed to a rise new energy technologies such as in solar panel technology, which could drive silver demand, while nickel’s key role in lithium-ion batteries may drive prices higher. Meanwhile, automation and technology integration could help copper, a major component in electric vehicles, and the expansion of global autonomous and electric vehicles may see an uptick in copper consumption.

Global photovoltaic panel installations continue to beat expectations with global solar panel demand expected to exceed 100 gigawatts for 2017. China alone installed 34 gigawatts of solar in 2016 and over 17 gigawatts in the first half of 2017.

Consequently, the increased demand for solar panels may help support the silver market as silver is a key material for photovoltaic panels.

The rising demand for electric vehicles and other technologies has also helped support lithium-ion battery growth. The battery industry will also require many other metal components, including cobalt and nickel.