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Why USO underformed CL before the crash?

Why USO underformed CL before the crash?

Crude Oil WTI NYMEX:CL1!

First thing you need to understand here would be the underlying of the ETF. Incase of USO, the underlying is "Future Contract On Wti Crude Future (contract)" THIS IS THE SOLELY THE CULPRIT. Why? Most of Futures trader may already know this, Some etf 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 ETF, via futures contract. "Cost of Carry" Futures in commodity are like options in stocks, but highly leveraged. Every time the Fund managers, Bump the Contract for USO, you are inherently losing money. Out of ALL the commodity ETF, GLD(IAU)/Silver is something that carries GOLD Bullion / Silver (more like a GOLD/Silver backed currency). Ironically, IAU (GOLD / 100 ETF) is possibly named after IOU. "I Owe You' 0.01 Oz Gold / for every IAU ETF shares. ;) Example of GLD / IAU / GC chart https://www.tradingview.com/x/RIjfSexJ/ Notice How closely they trade.