Commodities

In the investment world, commodities refer to physical raw materials that serve as the foundation for global production. They are traded in standardized form on specialized exchanges and can be divided into four main groups:

• Energy (crude oil, natural gas)
• Precious metals (gold, silver)
• Industrial metals (copper, aluminum)
• Agricultural commodities (wheat, coffee)

Investors primarily use commodities to diversify their portfolios, as their prices often move independently of stocks and bonds. Gold, in particular, is considered a safe haven in times of crisis. A key feature is protection against inflation: When energy and food prices rise, commodity investments typically benefit directly.

Trading rarely takes place physically but mostly through futures contracts, ETFs, or certificates. A distinctive feature is that commodities do not generate ongoing income in the form of dividends or interest. Returns result solely from price movements. Additionally, they are often more volatile than other asset classes, as geopolitical tensions, extreme weather events, or global economic cycles directly influence supply and demand.

Since commodities are predominantly traded in U.S. dollars on the global market, a strong dollar tends to lead to lower commodity prices. This creates the typical negative correlation between the strength of the dollar (measured, for example, by the DXY Index) and commodity prices (measured, for example, by the Bloomberg Commodity Index, CRB Index, oil price, or gold price).

What are the pros and cons of investing in commodities, and how can you, as a private investor, invest in commodities? That’s what the video podcast «Investing in Commodities: An Introduction» is all about.