Analyzing Commodities

This article contains commentary which reflects the author's opinion
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Three of My Favorite Commodities

I’m going to take a minute to talk economics and the markets. Particularly, gold, whole grains and oil are the three commodities I’d like to touch on. I’m maybe a minority, but I feel that these are three commodities you should be buying now. The market is always wishy-washy, but it’s the stock market – did you expect anything different? I’ve based my belief for buying now in each section of this article.

History is certainly on the side of the markets and that’s very comforting. Even when certain commodities have a bad year, expect the next fiscal year to produce anywhere from a two percent to a 200 percent increase in certain cases. Get out your money and build your portfolio now, it’s the time to buy. This because, mark my words, you will reap the rewards by the end of 2021. However, it’s important you; remain patient, cool and composed as in the end you’ll be laughing all the way to the bank.

These are most uncertain times and I get it, particularly for those effected by temporary layoffs. The extra cash-flow is likely not coming in. So, only if you have extra money kicking around, I recommend buying. Obviously, you need to make sure your bills are paid and your house is functioning properly. If this sounds like the situation you’re in, then simply buy, buy, buy.

Gold and the Fear Selling

On March 26, 2020 gold had jumped ten percent and is currently quoted at $1,638 an ounce. This is the official quoted price from Wall Street, the highest rise in over a decade. In actuality, it’s closer to $1,800 if you can get your hands on some. This is unprecedented, as the economy plunges and the government agrees to a record $2 trillion emergency lifeline. Thus, causing all the major gold dealers to sell their coins and gold bars in this fear-bludgeoned market.

Gold has a very stigmatic view for buyers as it is. Some believe in the power of the gold commodity, while others remain totally distant from it. Essentially, it’s easy to see why people won’t buy when they see these conflicting reports on gold and its value. I believe gold, like all commodities, has value for the buyer. However, paper currency will always be the bread and butter of an economy. This doesn’t mean that when gold is down you shouldn’t invest, as there’s true merit to owning gold.

Gold returns a healthy dividend if bought in moderation. Buying gold with the current interest rates can be scary. Thus, buy gold when interest rates are low and hold on to it no matter how hard it may be. This because, as you know, the market and therefore interest rates will fluctuate. Then, when you’re ready to sell once you’ve reached your investment tenure, do so. People will be more likely to invest in your gold you’re willing to sell in the future as opposed to now.  

Unstable Oil

Oil is a touchy subject in the markets, as I touched on a few weeks prior. When oil plummeted, hitting a record low, it was the second hardest drop on record. By the end of 2020, oil is projected to hit the worst year close since 2001. This is a scary premise for anyone who invests in crude oil. Keep in mind that the market almost always bounces back.

For example, think about this in 2002 the year closed at $31.21 for crude oil, but 2001 saw it at a low. There was a 56.36 percent annual increase for crude oil in that two-year period. Similarly, 1998 saw oil drop to a measly 12.14 percent at years end, but the next year oil finished at 25.76 percent. This was a whopping 112.19 percent increase, so is what I’m saying making sense? Clearly crude oil is a very liberal investment with such trends. Though it’s still a very rewarding investment if you buy and sell at the right times.

Grains

The Whole Grains Council had predicted the whole grains market to grow between 2017 and 2021. Grains include: soybeans and soybean oil, wheat, oats, canola, rice, and corn. Even today in these uncertain times, grains remain fairly stable. Mostly because farmers are still farming, transports are still able to cross the borders, and grocery stores (with moderative rules) are remaining open. Probably, in my humble opinion the most fiscally conservative commodity investment you can latch on to.

Thus far in Ontario, Canada there’s been an eight percent increase in 2020 compared to 2019. It’s a fair comparison as US and Canadian markets mirror similarly. Now I realize the fiscal year is still early, but with everything going on these are good numbers. Actually, anyone looking to invest in whole grain futures this is the time to do it. They’re reasonably affordable and it’s the only commodity on trend for a good fiscal year.

Summarizing it all up all three are sound investments. At any rate, they’re three of the best commodities to stick with. The pattern for success is great and you’ll reap the rewards. Don’t forget to follow me on Twitter and Instagram @brendon_on_the_right. Most important of all, have you joined NRN Plus? Simply, click this link and use the passcode NRN and receive your first week free. It’s that easy!

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Brendon Stitt
Brendon Stitt
Brendon Stitt is a writer for NRN. He has a master's degree in business and a vast knowledge of economics. Stitt's a neighbor to the north from Canada, though follows US politics religiously. Stitt covers a variety of topics from sports, to business and the markets, pop culture, and so much more.