Incase of , the underlying is "Future Contract On Wti Crude Future (contract)" THIS IS THE SOLELY THE CULPRIT. Why?
Most of trader may already know this, Some traders may not.
Few things to understand here would be
1. Concept of Contango / Backwardation
2. Storage Cost for commodity.
Most of the Commodity has storage cost, that will get priced into the , via contract. "Cost of Carry"
in commodity are like options in stocks, but highly leveraged.
Every time the Fund managers, Bump the Contract for , you are inherently losing money.
Out of ALL the commodity , GLD ( IAU )/Silver is something that carries GOLD Bullion / Silver (more like a GOLD/Silver backed currency).
Ironically, IAU ( GOLD / 100 ) is possibly named after IOU. "I Owe You' 0.01 Oz Gold / for every IAU shares. ;)
Example of GLD / IAU / GC chart
Notice How closely they trade.
Don't Let the contract cost eat your profit away. Try finding a good Micro Cap Oil Stocks. (Some Used to be Mid Caps are now in Small Caps and Micro Caps). Time your investment entry.
Notice the current Contango / Backwardation in Crude, Everytime the contract jumps to next month, the prices will have a bump up / down.