Economic conditions are improving, but inflation and rates expectations are increasing with some commodity supply shortages, which are likely to support commodity performance.
Reinforced by increased investor appetite for commodity allocations, broad-based commodity investments can be used as a source of returns and diversification. But the benefits tend to be tactical.
Our analysis suggests that gold is still the most effective commodity investment in a portfolio as it continues to stand apart from the commodities complex with stronger returns and diversification in various inflationary environments, maintaining lower volatility and better liquidity, all as a proven store of value.
There are recent developments that enhance gold’s importance:
• Reflation is underway – it is good for commodities, but can be even better for gold
• Gold’s weight is increasing in commodity indices but remains under-represented
• Gold’s volatility has been stable, despite extreme market uncertainty
Learn more about why this may be the right environment to consider how a strategic gold allocation on its own can supplement or replace a tactical broad-based commodities investment.
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