‘The story is all about gold.’ ETF experts on commodity-based strategies

Commodity cross-currents around the globe

While deflationary pressures have stripped a throng of precious metals and mining stocks of their luster this year, flows into certain commodity-based exchange-traded funds continue to accrue despite an uncertain global backdrop.

“We actually saw a pop in the last couple of weeks toward commodity ETFs,” Todd Rosenbluth, head of research at VettaFi, told CNBC’s Seema Mody on “ETF Edge” on Monday.

Rosenbluth said that engagement for precious metal commodity ETFs spiked earlier in May compared with the month prior, according to VettaFi data.

“The story is all about gold,” Will Rhind, founder and CEO of GraniteShares, said Monday in the same segment. “[It’s] the only major metal to remain firmly in the green for this year.”

Rhind said that the uptick is largely due to debt ceiling negotiations and a potential default. The ongoing banking crisis still looms, higher inflation and a declining dollar are also tail winds for the precious metal, he said.

“Gold is really serving its purpose at the moment as a way for people to park money in a noncorrelated asset as they worry about what might happen,” Rhind said. “Certainly, [to] hedge themselves against the probability of something falling out of bed with the debt ceiling.”

Flows into the SPDR Gold Shares have exceeded $1.14 billion the past month, according to FactSet. The iShares Gold Trust (IAU) and the SPDR Gold MiniShares Trust (GLDM) saw net inflows of $182 million and $222 million, respectfully, in the same period of time.

But as a potential deal on the debt ceiling could come as soon as this week, Rosenbluth suggested broadening exposure in the precious metals and mining space.

“Gold may not continue to be in favor forever,” Rosenbluth said. “We’re also finding advisors are interested in active management within the commodity space. The Neuberger Berman Commodity Strategy ETF (NBCM) is another way to get diversified exposure to commodities.”


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