Last week, we explored Private Equity and Venture Capital, two strategies designed for investors seeking high-growth opportunities in private markets. This week, we’re shifting gears to something a little more… tangible: Commodities.

Gold, oil, wheat—these aren’t just things you hear about on the news. They’re part of a powerful investment strategy that’s been helping investors protect their wealth for centuries. While commodities may not have the excitement of tech stocks, they can offer something equally valuable: stability when markets get rocky.

Why Commodities Matter

Ever notice how gas prices seem to skyrocket when inflation rises? Or how gold tends to spike when investors get nervous?

That’s no coincidence. Commodities like oil, gold, and even agricultural products often move independently of traditional stocks and bonds. That makes them a potential hedge against inflation and a tool for diversifying your portfolio.

If you’re wondering how to get involved, there are several options. Some investors prefer to own the physical asset—like gold bars or silver coins. While this gives you direct ownership, you also have to think about storage and security.

Others invest in commodity ETFs—funds designed to track the price of commodities without requiring you to own physical assets. Some investors gain exposure through futures contracts, which are agreements to buy or sell a commodity at a set price in the future. Futures can offer big returns, but they can also create big losses.

Another option is to invest in companies that produce commodities—such as energy producers, mining companies, or agricultural businesses. This approach can give you exposure to commodities without the added complexity of direct ownership.

Commodities in Action: Real-Life Examples

Let’s look at how commodities have behaved during key moments in recent history.

During the 2008 financial crisis, gold prices surged as investors rushed to find safety. A similar pattern happened during the COVID-19 market turmoil in 2020, when gold hit all-time highs. Historically, gold has been viewed as a safe haven when the markets turn unpredictable.

In 2022, oil prices climbed sharply as inflation surged and supply chains struggled. For those with energy investments, this created a significant boost.

Agricultural commodities are a different story. Prices for wheat and corn can swing wildly based on weather, political instability, or global supply chain disruptions. In 2022, geopolitical tensions caused wheat prices to spike, creating both profit opportunities and risks.

The Catch

Commodities can offer powerful protection, but they aren’t without risks. Prices can be extremely volatile, and timing is everything. Unlike stocks or bonds, commodities don’t generate income—they rely entirely on price changes for returns.

If you’re considering adding commodities to your portfolio, it’s important to ask yourself:

• Am I prepared for short-term volatility?
• Do I have a plan to manage risk?
• How does this fit into my long-term goals?

Key Takeaway

Commodities may not be the flashiest part of your portfolio, but when used strategically, they can provide real protection in uncertain times.

Next Week’s Topic

Next week, we’ll explore Options and Option Overlay Strategies—tools that sophisticated investors use to manage risk and enhance returns. Don’t miss it!

Warmly,

Jeff Perry

Partner, Quest Commonwealth

Co-Host of Safe Money Mindset on WWJ-TV CBS Detroit

Author of Safe Money Mindset – Available on Amazon or DISCOUNTED HERE

👉 Watch our latest TV episodes of Safe Money Mindset on YouTube

Weekly Tip

Have you thought about how rising costs or falling markets could affect your retirement plan?

If so, it may be time to explore ways to protect your portfolio. Strategies like commodities can help hedge against inflation, but they aren’t the only option.

Whether it’s commodities or other defensive strategies, having a plan to weather uncertain markets can provide greater peace of mind.

And remember—you can’t get a second opinion from the same person or company that gave you the first.

If you’re unsure about your investment strategy, getting an outside perspective might be a smart move.