Just as the rally in U.S. stocks is starting to show signs of strain, some of the market’s biggest commodity funds are starting to gain momentum. As of April 5, the SPDR GLD Stock ETF (GLD) was up 7.9% over the past month, trading at an all-time high. iShares Silver Trust (SLV) rose 12% and United States Oil Fund LP (USO) gained 11.2%. Some stock funds with strong exposure to these commodities, such as those investing in gold and silver miners, saw even bigger gains. At the same time, prices for some typically obscure agricultural products, such as cocoa, soared. There are no U.S. ETFs that directly track cocoa. All in all, gains in many commodities could drive up inflation data and disrupt the plans of companies like Hershey that rely on them. Investors should note, however, that some of the stories behind these rallies are idiosyncratic. “When you look at something like cocoa, it’s been going on its own. Similar to orange juice futures. These are supply and demand stories based on weather and production issues,” said Jack Hanley, managing director and senior portfolio specialist. (Jake Hanley) said. Teucrium. The possible exceptions are oil and gold, where concerns over conflicts in the Middle East and Europe and potential supply issues could push prices higher. “Gold prices, energy prices are rising, and I think geopolitical issues are the main drivers,” Hanley said. Who is buying gold? However, gold’s record high is not as simple as retail investors fleeing for safety. FactSet data shows that five of the six major gold ETFs have experienced outflows this year, totaling nearly $3 billion. Robert Minter, director of investment strategy at Abrdn ETF, said: “For a long time, investors have really completely ignored commodities. Gold prices have been high, and it’s not because of investors.” On the contrary, Minter said, the main source of gold buying seems to come from foreign countries Central banks, and more recently hedge funds that have bet on rate cuts from the Federal Reserve, have historically been bullish for gold. GLD 5-Year Mountain Gold and the ETF tracking it are trading at record highs in early 2024. What’s next? Abrdn’s Real Precious Metals Basket Equity ETF (GLTR) is up more than 8% in the past month. The fund’s holdings include gold, silver, platinum and palladium. Minter said platinum and palladium are key metals for hybrid vehicles, and demand is likely to be greater in the coming years as automakers shift their focus from pure electric vehicles to hybrids. Minter said palladium is likely to stage a rebound due to its sharp decline since its peak in early 2022. “As long as commodity prices are down 70% and demand is still strong and supply issues are emerging, that looks like a good time to reverse the trade,” Minter said. Meanwhile, several of Teucrium’s agricultural-focused ETFs have fallen sharply in the past month. There were also gains, including the Teucrium Soybean Fund (SOYB), which rose more than 3%. Hanley said some companies are starting to experiment with using soybeans as a renewable energy source, potentially creating additional future demand.
