Commodity ETF

A type of exchange-traded fund that attempts to track the return of a commodity or a basket of commodities or a commodity benchmark index.

Some commodity ETFs, such as GLD(gold) or SLV(silver) actually own the metal in vaults and each share represents a certain amount of ownership of a metal(each share of GLD is worth 1/10 ounce of gold and each share of SLV is worth 10 ounces).

Other commodities like oil costs more to store and agricultural commodities are perishable, thus these commodity ETFs attempt to track a commodity or index by using futures and derivatives. This may cause certain inaccuracies, as evidenced by the fact that USO, an ETF that attempt to track spot crude oil prices is over $20 lower than the spot crude oil price(as of August 2008)

Commodity ETFs may or may not be good investments. This will be covered in an article on our site. Feel free to check it out (link:… has yet to be updated)

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