So far in 2024, the commodity sector is on an explosive upward trend. Since the beginning of the year, oil futures are up 12%, copper is up 26%, silver is up 25% and gold is up 15%.
According to Ben McMillan, CIO of IDX Advisers, the party is just beginning.
Mr. McMillan manages the IDX Commodity Opportunities Fund (COIDX), which is up 6.5% in 2024 and 2.6% since its inception on November 4, 2022. Although it seems insignificant, major indexes such as the Bloomberg Commodities Index and S&P GSCI are posting -8. During that time, you will get a profit of % and -11% respectively. The fund invests in a variety of commodity ETFs through an active management strategy, allowing investors to hedge against downside risk while leaning toward areas of the market that McMillan and his team believe will outperform. We are making it possible to obtain a wide range of exposure.
In an interview with Business Insider on Thursday, he said he believes the commodity sector is at the beginning of a secular bull market that will last several years.
There are several reasons for this. One is that higher government deficit spending leads to a weaker U.S. dollar, which increases commodity prices because they are denominated in U.S. dollars, he said. The other is that geopolitical conflicts are likely to continue, and have already caused commodity prices such as oil and grain to soar. Third, the world’s central banks have been buying gold in large quantities and will continue to do so, so individual traders will do the same, he said.
“We believe we are in the early stages of a commodity bull market,” McMillan said. “These are not instant turnarounds. These are long-term, major generational changes that will reset prices for these products higher forever.”
To take advantage of this, McMillan shared three ways investors can gain exposure to this space.
3 Commodity Investments to Watch
First, McMillan said he likes to invest in both. Money and copperHe believes it could trade 20% higher in a year’s time than it does now, and could double in price over the next 10 years.
For copper, McMillan said there was a bullish trend in supply due to the temporary closure of some mines and the ongoing global movement towards digitalisation and electrification. Ta.
“Depending on what analysts say, copper consumption over the next 10 to 50 years will exceed consumption over the past 500 years,” he said.
As for gold, as mentioned above, central banks continue to buy up the precious metal, and McMillan believes there will be further demand from US retail investors.
“Countries are actively selling U.S. Treasuries in order to buy gold. I don’t think this situation will reverse anytime soon,” he said, adding, “We expect gold prices to continue to hit record highs this year and next. “I am doing so,” he said.
He recommended gaining exposure to metals through ETFs, given that different products offer tailored exposure to what investors are looking for. ETFs also allow investors to capture upward movement in assets without having to physically hold and store them, providing a higher level of liquidity.
iShares Gold Trust (IAU), SPDR Gold Shares (GLD), and GraniteShares Gold Trust (BAR) are common funds that investors use to gain exposure to the gold price. For copper, the US Copper Index Fund (CPER) provides exposure to the metal’s spot price.
McMillan said he was similarly positive, given his bullish view on the overall commodity space going forward. mining companyespecially companies that mine precious and industrial metals.
“We believe there is a lot of untapped value in the mining industry,” McMillan said.
Funds such as Global X Silver Miners ETF (SIL), US Global GO GOLD and Precious Metal Miners ETF (GOAU), and iShares MSCI Global Metals & Mining Productions ETF (PICK) offer diverse exposure to the themes mentioned .
