The Good, the Bad, and the Ugly of Commodity ETFs

Here’s my summary of market sentiment right now. If investors owned as much of their wealth in commodity exchange-traded funds (ETFs) as they do in S&P 500 Index ($SPX) ETFs, what’s been happening since late last year would be dominating the news and dinner table conversations.

One glance at performance over two distinct time frames — one month and six months — tells the story. There’s lots of variability. And very recently, perhaps the beginning of the end for the highest flyers in the commodity space.

This part of the market has entered a period of intense fragmentation following a historic rally at the start of the year. While broad indices like the Invesco DB Commodity Index Tracking Fund (DBC) remain significantly above their 52-week lows, recent sessions have seen a violent unwinding of several formerly high-flying sectors.

This split in performance highlights a market that is no longer moving as a single unit but is instead being pulled apart by specific supply dynamics and shifts in buyer sentiment.

Here’s a daily view of DBC. It has hit a roadblock.

And when we examine the list of holdings for this ETF, we can see why. Gold, silver, copper, and oil have all had strong runs, sometimes in sync and other times not. But now, they are all at risk of peaking at the same time. For commodity investors and traders, this is a good time to take account of where there might be another leg higher to be had. As well as which ones are looking bad and ugly, as the old movie title goes.

The brighter spots in the market are found where actual physical demand is clashing with tight supply chains. That includes select food products that have largely avoided the recent carnage hitting other sectors. Here’s DB Agriculture Fund Invesco (DBA), which drills down to that subsector. In this case, flat price action is better than what we’ll see below.

Here’s the Gold SPDR (GLD), and like silver, it is hinting that the best of times are done for a while. Given the meme-like surges we’ve seen, this will be very interesting to watch.

My observation is that markets in 2026 are all about liquidity, and chasing one market area after another. Just like a pizza after it’s been out of the oven for a while, these might be cooling down in a meaningful way.