Some advantages of commodity investing include:
Global Commodity Markets are easy to access and offer broad diversification to a traditional investment portfolio. A portfolio with assets that don’t move in lockstep can help you better manage market volatility.
Commodity prices can fluctuate due to factors such as supply and demand, exchange rates, inflation, and the overall health of the economy. In recent years, increased demand due to massive global infrastructure projects has greatly influenced commodity prices.
Potential Hedge Against Inflation
Inflation, which can erode the value of stocks and bonds over time can often mean higher prices for commodities. Investing in commodities directly can provide a hedge to these rising prices. While commodities have shown strong performance during periods of high inflation, investors should note that commodities can be much more volatile than other types of investments.