Short Or Long, Profits In Commodities Are Here
In This Article:
The U.S. is either entering or is already in—depending on who you listen to—a recession, and we’ve been dealing with heightened inflation for quite some time. These two factors provide worry, but also opportunity.
A weakening economy usually causes demand to fall. Of course, there are differing opinions about if, when and for how long prices will decline. But inflation causes the opposite to occur. Increasing prices make our dollars go less far. Fortunately for the individual investor, there are both good choices for selling (or shorting) commodities, and buying (or going long) commodities, when the time is right.
First, let’s look at some interesting choices on the long side:
Teucrium Agricultural Strategy No K-1 ETF (TILL)
TILL is a way to go long corn, wheat, soybeans, and sugar futures. TILL is an actively managed fund seeking long term capital appreciation and invests in futures contracts according to a proprietary model. That’s one contract per market, maintaining perpetual, long only exposure to each commodity. Rebalances occur monthly to maintain an approximate equal weight across its holdings.
WisdomTree Enhanced Commodity Strategy Fund (GCC)
GCC offers broad diversification to 25 types of commodities across six sectors. It is actively managed and primarily invests in futures contracts. The fund may also invest up to 5% of its net assets in bitcoin futures contracts but will not invest in bitcoin directly.
Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)
PDBC is an actively managed ETF that invests in futures and other financial instruments providing economic exposure to a diverse group of commodities. PDBC seeks to exceed the performance of DBIQ Optimum Yield Diversified Commodity Index Excess Return, an index composed of futures contracts on 14 heavily traded commodities across the energy, precious metals, industrial metals, and agriculture sectors.
United States Oil Fund LP (USO)
USO tracks the performance of near-month West Texas Intermediate crude oil futures contracts.
GLD is a physically backed gold ETF that holds deposits of physical bullion in secure vaults, with each share of GLD representing a claim to a fraction. GLD has strong liquidity, high assets under management, and an expense ratio of 0.4%.
SLV is GLD’s cousin. This ETF tracks a deposit of physical silver held in secure vaults, totaling over $11 billion in AUM, approximately 17,000 metric tons. SLV has an expense ratio of 0.5%.