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Commodities have again worked their way onto the front page of mainstream newspapers and lead stories on your nightly newscast. The increased prominence is justified.

Oil has returned to the $90 per barrel level last seen a year ago, in defiance of Federal Reserve1 efforts to calm inflation.2

Indignation at higher energy prices is made worse because the labor market is tight and wages are rising, contributing to service-sector inflation. United Airlines pilots received a 46% pay hike in July, followed by a flight attendants union demand for a 35% pay increase in August.3

The United Auto Workers (UAW)4 strike is underway with its call for a 46% wage boost and a 32-hour work week.5 Worker demands are being taken more seriously as strikes are costly. The US Labor Department notes that US businesses lost 4.1 million workdays due to work stoppages in August, which does not include the UAW strike that started in September.6 The preliminary estimate of work stoppages in August is the highest monthly number since August 2000. US workers are striking at the highest rate in 23 years, putting the focus on supply and demand issues in the economy.

The undersupply of goods and services remains an issue, … particularly in commodity markets

How did we get a 30% rise in oil prices in less than three months?7

  • The US has stopped selling emergency stockpiles of oil into the commercial market. Over the last several years, the US Government's emergency stockpile has been drained from 695 million barrels in January 2017 to 350 million in August 2023. Some of those sales were mandated via Obama-era bipartisan legislation, but the release of 345 million barrels of oil into the commercial markets did lower oil prices until recently.8
  • Saudi Arabia extended voluntary production cuts of 1 million bpd, currently through December 2023.
  • Russia extended voluntary production cuts of 300,000 bpd, currently through December 2023.9
  • US oil production is 12.9 million bpd, an all-time high, but the US now exports 2 million bpd more than in 2019.10 That 60% increase offsets rising demand and falling supply elsewhere, so we don't receive the low price benefit of increased production.
  • US citizens traveled in numbers never seen before, exceeding even the 2019 volume, raising fuel demand.11
  • The International Energy Agency12 notes that 2023 global oil demand will rise by 2.2 million bpd due to strong air travel, increased fuel use for electricity generation, and surging Chinese demand.13

What BRICS expansion could mean

The oil price rise may have overshadowed the 15th annual BRICS summit held last month – an important event with implications for commodity markets in the medium term.

This year's meeting, which normally includes Brazil, Russia, India, China, and most recently, South Africa, added six more countries: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. The addition of these countries means the new BRICS group of countries now accounts for 46% of the global population, 43% of global oil production, and 29% of global gross domestic product, certainly figures themselves that demand attention. It is essential to understand the motivation to join the group as several countries have been in decades-long disputes with each other. Egypt and Ethiopia have been in an ongoing dispute that started in 2010 over the Grand Ethiopian Renaissance Dam, which Egypt believes violates a 1959 treaty on water rights for the Nile River. Iran and Saudi Arabia have been in regional conflicts since 1979 that have occasionally escalated to proxy military confrontations.

BRICS leaders look beyond disputes, but why?

The Council of Foreign Relations states, “The slew of applications to join the BRICS is clearly a symptom of a deeper malaise. The west's proclivity to deploy unilateral financial sanctions, abuse international payments mechanisms, renege on climate finance commitments, and accord scant respect to food security and health imperatives of the Global South14 during the pandemic are only some of the elements responsible for the growing disenchantment with the prevailing international system.”15

Sanctions a motivator of emerging markets?

A working paper published earlier this year by the International Monetary Fund16 noted that primary economic issues for developed countries result from geopolitical stress, while emerging market issues come from economic stress, often as a result of sanctions. “Financial sanctions are often imposed by the US, UK, EU and Japan, the main reserve currency economies,” the IMF wrote.17 The paper shows that of the ten largest annual increases in gold's share of foreign reserves since 1999, half of them were in countries subject to sanctions in the same year or in the two preceding years. Said another way, sanctions motivate emerging market countries to diversify their foreign reserve holdings into gold.

Regardless of motivations, central bank purchases of gold have been a critical part of the gold story over the last few years. Gold ETF investors sold 13 million ounces of gold last year from April through year end and sold 4 million more ounces this year through August. On the other hand, central banks have been large buyers of the gold, snapping up 1,078 tons last year and 228 tons in this year's first quarter.18

Final thoughts

The expanded number of countries participating at this summer's BRICS summit shows in vivid terms the propensity of emerging countries to choose their own path, unencumbered by foreign policy wishes of global reserve currency nations. The implications for increasing the share of gold in their foreign reserves is a potential positive for gold prices.

1 The Federal Reserve is the central bank of the United States of America.
2 Bloomberg, as of 15 September 2023.
3 https://www.reuters.com/business/aerospace-defense/united-airlines-pilots-reach-agreement-principle-receive-about-35-pay-increase-2023-07-15/
4 UAW is a large US trade union for car, aerospace and metal industries.
5 https://abcnews.go.com/Business/day-workweek-46-raise-uaw-makes-audacious-demands/story?id=102926195
6 https://www.wsj.com/business/the-u-s-lost-4-1-million-days-of-work-last-month-to-strikes-92c6a9f7
7 Bloomberg data oil 06/27/2023 to 9/15/2023
8 https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?f=M&n=PET&s=MCSSTUS1
9 https://www.nytimes.com/2023/09/05/business/saudi-arabia-russia-oil-cuts.html
10 https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
11 https://www.tsa.gov/news/press/releases/2023/08/29/tsa-prepares-labor-day-weekend-travelers-busy-airports-based-summer
12 The IEA is an autonomous intergovernmental organization that provides analysis on the energy industry.
13 https://www.iea.org/reports/oil-market-report-august-2023
14 Global South is in reference to a group of countries defined as having a relatively low level of economic and industrial development.
15 https://www.cfr.org/councilofcouncils/global-memos/brics-summit-2023-seeking-alternate-world-order
16  IMF is a financial agency of the United Nations funded by 190 member countries
17 https://www.imf.org/en/Publications/WP/Issues/2023/01/27/Gold-as-International-Reserves-A-Barbarous-Relic-No-More-528089
18 https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q1-2023

Important information

The statements and opinions expressed are those of the author and are as of the date of this report. All information is historical and not indicative of future results and subject to change. Reader should not assume that an investment in any securities and/or precious metals mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance does not guarantee future results.

Trading in commodities entails a substantial risk of loss and is not suitable for all investors.

Diversification does not eliminate the risk of experiencing investment losses.

Prospectuses for abrdn Physical Gold Shares ETF, abrdn Physical Palladium Shares ETF, abrdn Physical Platinum Shares ETF, abrdn Physical Precious Metals Basket Shares ETF and abrdn Physical Silver Shares ETF

Projections are offered as opinion and are not reflective of potential performance.

Projections are not guaranteed, and actual events or results may differ materially.

ALPS Distributors, Inc. is the marketing agent.

There are risks associated with investing including possible loss of principal.

ALPS is not affiliated with abrdn.

ETF002095 9/30/24

AA-180923-168408-1

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Investors should carefully consider a fund’s investment objectives, risks, fees, charges, and expenses before investing any money. To obtain this and other fund information, please call 866-667-9231 to request a summary prospectus and/or prospectus, or download at www.abrdn.com/us. Please read the summary prospectus and/or prospectus carefully before investing any money.

Aberdeen Fund Distributors, LLC is a wholly owned subsidiary of abrdn Inc. abrdn Inc. is a wholly-owned subsidiary of abrdn plc. abrdn Funds are distributed by Aberdeen Fund Distributors LLC, Member FINRA and SIPC. 1900 Market Street, Suite 200, Philadelphia PA, 19103.

NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

For ETFs, please call 844-383-7289 or click here to access a prospectus online. Investing involves risk, including possible loss of principal. ETF shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund.

Important Risks

The abrdn Gold ETF Trust, abrdn Silver ETF Trust, abrdn Precious Metals Basket ETF Trust, abrdn Platinum ETF Trust and abrdn Palladium ETF Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.

Commodities generally are volatile and are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility. Please refer to the prospectus for complete information regarding all risks associated with the Trusts. Shares in the Trusts are not FDIC insured and may lose value and have no bank guarantee.

The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including:

A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares;

Investors’ expectations with respect to the rate of inflation;

Currency exchange rates;

Interest rates;

Investment and trading activities of hedge funds and commodity funds; and

Global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the Shares. Should there be an increase in the level of hedge activity of the precious metal held by the Trusts or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.

Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the shares. There is a risk that part or all of the Trusts’ physical precious metal could be lost, damaged or stolen. Failure by the Custodian or Sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts.

The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust’s precious metal that is not covered by insurance.

Commodities generally are volatile and are not suitable for all investors.

Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or "authorized participants" may trade directly with the Trusts, typically in blocks of 25k to 100k shares.

Commodities generally are volatile and are not suitable for all investors. This material must be accompanied or preceded by the prospectus. Carefully consider each Trust’s investment objectives, risk factors, and fees and expenses before investing. Please click here to review the prospectus.

ALPS Distributors, Inc. is the marketing agent for the abrdn Gold ETF Trust, abrdn Silver ETF Trust, abrdn Precious Metals Basket ETF Trust, abrdn Platinum ETF Trust and abrdn Palladium ETF Trust.

ALPS Distributors, Inc. is the distributor for abrdn ETFs.

ALPS Distributors, Inc. is not affiliated with the companies of abrdn.

'40 Act Fund Disclosure:

An investor should consider the investment objectives, risks, charges and expenses of the ETFs carefully before investing. To obtain a prospectus containing this and other important information, call 1-844-383-7289 or visit www.abrdn.com/us/etf. Read the prospectus carefully before investing.

Fund Risk: There are risks associated with investing including possible loss of principal. Commodities generally are volatile and are not suitable for all investors. There can be no assurance that the Fund’s investment objective will be met at any time. The commodities markets and the prices of various commodities may fluctuate widely based on a variety of factors. Because the Fund's performance is linked to the performance of highly volatile commodities, investors should consider purchasing shares of the Fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of the Fund. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. The Fund’s return may not match the return of the index.

Through holding of futures, options and options on futures contracts, the Fund may be exposed to (i) losses from margin deposits in the case of bankruptcy of the relevant broker, and (ii) a risk that the relevant position cannot be close out when required at its fundamental value. In pursuing its investment strategy, particularly when rolling futures contracts, the Fund may engage in frequent trading of its portfolio of securities, resulting in a high portfolio turnover rate.
As a "non-diversified" fund, the Fund may hold a smaller number of portfolio securities than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of Shares may be more volatile than the values of shares of more diversified funds.

During situations where the cost of any futures contracts for delivery on dates further in the future is higher than those for delivery closer in time, the value of the Fund holding such contracts will decrease over time unless the spot price of that contract increases by the same rate as the rate of the variation in the price of the futures contract. The rate of variation could be quite significant and last for an indeterminate period of time, reducing the value of the Fund.

Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Subsidiary to operate as intended and could negatively affect the Fund and its shareholders.

To the extent the Fund is exposed directly or indirectly to leverage (through investments in commodities futures contracts) the value of that Fund may be more volatile than if no leverage were present.

In order to qualify for the favorable U.S. federal income tax treatment accorded to a regulated investment company ("RIC"), the Fund must derive at least 90% of its gross income in each taxable year from certain categories of income ("qualifying income") and must satisfy certain asset diversification requirements. Certain of the Fund’s investments will not generate income that is qualifying income. The Fund intends to hold such commodity-related investments indirectly, through the Subsidiary. The Fund believes that income from the Subsidiary will be qualifying income because it expects that the Subsidiary will make annual distributions of its earnings and profits. [However, there can be no certainty in this regard, as the Fund has not sought or received an opinion of counsel confirming that the Subsidiary’s operations and resulting distributions would produce qualifying income for the Fund.] If the Fund were to fail to meet the qualifying income test or asset diversification requirements and fail to qualify as a RIC, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income. Investors buy and sell shares on a secondary market (i.e., not directly from the Trust). Only market makers or authorized participants may trade directly with the funds, typically in blocks of 25K to 100K shares.

The abrdn Bloomberg Industrial Metals K-1 Free ETF is new and has limited operating history.

“Bloomberg®” and “Bloomberg Commodity Index Total ReturnSM,” “Bloomberg Commodity Index 3 Month ForwardSM” and “Bloomberg Industrial Metals Subindex Total ReturnSM” are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by abrdn ETFs Advisors LLC. Bloomberg is not affiliated with abrdn ETFs Advisors LLC, and Bloomberg does not approve, endorse, review, or recommend abrdn Bloomberg All Commodity Strategy K-1 Free ETF (BCI), abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD), and abrdn Bloomberg Industrial Metals K-1 Free ETF (BCIM). Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Index Total Return, Bloomberg Commodity Index 3 Month Forward” and “Bloomberg Industrial Metals Subindex Total Return".

Please see the current prospectus, www.abrdn.com/us/etf for more information regarding the risk associated with an investment in the Funds.

S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.

Standard Deviation: Standard deviation is a statistical measure of the extent to which returns of an asset vary from its average.

Bloomberg Commodity Index: The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Indexes.

Discount- A situation when the share price of a fund trades below its net asset value.

Premium- A situation when the share price of a fund trades above its net asset value.

The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.

Annualized Volatility is a statistical measure of the dispersion of returns for a given security or market index

Beta is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market

Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk
NAV or Net Asset Value represents the per share/unit price of the fund on a specific date or time.

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing.

abrdn offers a variety of products and services intended solely for investors from certain countries or regions. abrdn does not offer these products or services outside their intended countries or regions. Your country of legal residence will determine the products or services that will be available to you. Nothing on this website should be considered a solicitation or offering for sale of any investment product or service to any person in any jurisdiction where such solicitation or offer would be unlawful.

Persons residing outside the United States are invited to visit our global website for more information about products and services available to non-U.S. investors.

Alternative investments involve specific risks that may be greater than those associated with traditional investments; are not suitable for all clients; and intended for experienced and sophisticated investors who meet specific suitability requirements and are willing to bear the high economic risks of the investment. Investments of this type may engage in speculative investment practices; carry additional risk of loss, including possibility of partial or total loss of invested capital, due to the nature and volatility of the underlying investments; and are generally considered to be illiquid due to restrictive repurchase procedures. These investments may also involve different regulatory and reporting requirements, complex tax structures, and delays in distributing important tax information.

Diversification does not ensure a profit or protect against a loss in a declining market.

Among the risks presented by private equity investing are substantial commitment requirements, credit risk, lack of liquidity, fees associated with investing, lack of control over investments and or governance, investment risks, leverage and tax considerations. Private equity investments can also be affected by environmental conditions / events, political and economic developments, taxes and other government regulations

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The purpose of this website is to provide general information about the US-registered investment advisers which are part of abrdn, and the strategies they manage. The information provided is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

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