Is Now the Right Time to Invest in Commodities?

As an investor you may wonder if this is the right time to invest in commodities or not? A commodity is defined as “A good for which there is demand, but which is supplied with qualitative differentiation across a market.”

As an investor you may wonder if this is the right time to invest in commodities or not? A commodity is defined as “A good for which there is demand, but which is supplied with qualitative differentiation across a market.”

Commodities are very often substances that are obtained from the earth. Soft commodities are goods that are grown such as agricultural products (examples include wheat, salt, sugar, rice, soybeans and coffee beans) while hard commodities are extracted by way of mining (such as iron ore, crude oil, coal, gold, silver and platinum). There are also energy commodities. Examples of these include electricity, coal, gas and oil. 

Is now the right time to invest in commodities? The answer is yes. At the present time the prices are low and the prospects of future demand from developing countries is very strong. This is why it is believed that we are presently in the middle of a bull market for commodities that will not just be long but profitable as well.

There are three significant points to be made in regards to the reason why now is the right time to invest in commodities. First of all commodities tend to do very well in the markets when other investments that are deemed as more popular and have to do with retail investors are  not doing well at all. This is also the case when economic conditions are not as most investors would like them to be.

Secondly, when the typical economic underpinnings are taking place a bull market that is secular in design for commodities (a “secular bull market” in other words) will last up to a period of 17 years. At the current time the underpinnings in their market are not typical. What this means for commodities is that the bull market that is going on at present could last a great deal longer than bull markets of this time often do.

The final and third point to make is that the commodities bull market has been going on for approximately nine years to date. What that means is that we could have at least eight more years to go (or even more).

Ever since the year 2000 a secular bear market for general stocks has been taking place. Many investors become discouraged about this and figure that they can kiss portfolio profits goodbye. There is no need to get this upset or to become overly dramatic about this situation. In the investing world there is an old adage that says, “There is always a bull market somewhere.” What this means is that even if a secular bear market for stocks is taking place, it is likely that if you look you will also discover that there is a secular bull market for commodities. What this means for you as an investor is that you need to focus all of your attention and your efforts on the sectors that contains hard-assets.

There are a variety of specific commodities as well as commodity groupings. When investing in commodities you have a number of choices. There are agricultural commodities such as raw grains. These include corn, oats and wheat. There are metal commodities. Of these the main raw metal commodities include gold, silver, platinum, aluminum and copper. There are meat commodities which are raw products such as pork bellies (bacon) and live cattle. Soft commodities include coffee, orange juice, sugar and lumber. Energy commodities include heating oil, gasoline and crude oil.

Is not the right time to invest in commodities? It certainly is. Commodities are an excellent way to invest your money today. 

Find out if it is too late to invest in gold.