The Power of Investing in a Commodity ETF

The first thing that needs to be understood about a commodity ETF, isn’t even what it does or how, but the supply and demand of raw materials in the years ahead.

For example, huge emerging middle classes are growing at a fast rate, and even though we’re in a temporary global recession, as soon as economies start to pick up, demand for goods will begin again.

What the economic slowdown has done is simply delay and extend the commodity bull market, not destroy it.

So now is the time to do your homework and research and look at where the demand will be in the years ahead. Not only will China and India be big users of natural resources and agricultural goods, but Eastern Europe and Russia will as well.

With that in mind, let’s look at what a commodity ETF fund can do in that climate.

A commodity ETF fund is primarily used in two ways. First it can directly invest in futures, where the highly leveraged investment has money left over to put into interest-bearing accounts where the proceeds can be used to pay out dividends or expenses.

They can also be used to track a single commodity like gold or silver, or a basket of commodities.

Within those parameters there can also be investment in commodity production companies like mining firms, where other expense factors like trading and storage must be considered.

Finally, anyone investing in commodity ETFs will need to get advice from their accountant or research the tax event that comes with it, as it’s different than most other investment vehicles.

Prepare for the resurgence of demand for commodities, and take a serious look at commodity ETFs, which can be traded like stocks and should enjoy a good run up for years into the future.