Every investor wants to enhance their portfolio to its fullest capacity.
You want your investments to be worthwhile. And that means making the returns you were hoping for when you decided to put your hard-earned money into certain companies and stocks.
One way to increase that likelihood is to work on diversifying your portfolio. And one step for creating diversity is to invest in some commodities.
They can bring diversity to your portfolio in a way that goes beyond traditional securities, whether it be for the long term or as a way to earn profits during volatile or bearish stock markets.
A commodity is a basic good or material that’s used in commerce. Commodities include agricultural products, energy, metal, livestock, and meat. Commodities are things that are parts of our everyday lives.
Keeping this in mind, here are three commodities that’ll make your portfolio smile…
1. Copper
Copper was once considered one of the worst performing commodities, but that’s changed. A rally began during the 2016 U.S. presidential elections when then-presidential nominee Donald J. Trump announced his $500 billion plans to rebuild infrastructure throughout the country.
Copper is crucial when it comes to building infrastructure. Construction companies and workers need it for building the projects they’ve been obligated and paid to do. Your office building and any of the bridges you’ve driven across wouldn’t be possible without the use of copper.
America isn’t the only country on a copper rally. China is currently responsible for almost 50% of the global copper demand. China’s increasing demand for copper and its decreasing supply continues the rally for this metal. This explains why most analysts have shifted their outlooks on copper and see it returning from its unfortunate downfall.
Molly Shutt, a commodities analyst at BMI Research, has shared her positive predictions for copper’s future. She expects the global market to shift into a slight deficit by 2019 — a bit sooner than previously anticipated — and that steady demand growth will outpace decelerating production growth.
Most of Caterpillar’s (NYSE: CAT) equipment sales are to the coal-, copper-, and iron-ore sectors. So, as more copper is needed to mine, more equipment will be needed to get the job done. Caterpillar has been waiting for a copper push, and it’s here.
2. Agriculture (Soybeans and Wheat)
The U.S. Department of Agriculture (USDA) has reported that U.S. grain and feed exports in fiscal 2017 are now forecasting $29 billion, $400 million more than their February forecast predicted.
In the government’s monthly supply and demand report, it indicates that soybean stocks will increase more than the government expected because of the decrease in soybean meal usage, which has resulted in processing plants reducing their crushing paces.
Soybeans play an important role in the world’s economy — they have a wide variety of uses that range from feeding livestock to the creation of vegetable oil. Of the world’s soybean production, 55% comes from the Americas with the U.S. exporting 37% of the world’s soybeans.
Agriculture stocks have underperformed in the past, but some opportunities could be coming up for long-term investors — a possible agriculture rebound.
3. Gold
The instability and uncertainty of the market are what drives gold. Of course, there are a variety of reasons as to why uncertainty continues to linger in the market, but right now, we have some big factors that are helping gold prices soar…
The U.S. dollar is weakening as more news comes to the surface about President Trump and the instability of his administration. Gold has always been viewed as a safe haven when it comes to economic uncertainty. And right now, there’s a lot of that going on. This has investors doing everything that they can to prevent losing their money.
The chief market analyst at ThinkMarkets UK, Naeem Aslam, has this to say about gold prices:
The dollar has been under serious assault, which has pushed the price of gold higher.
As long as the dollar bleeds, we do think that the gold price would continue to move higher and could touch the level of $1,300.
Lingering skepticism from the market and investors will continue pushing us toward a gold rally that’ll benefit your portfolio.
Until next time,
Jennifer Clark
Pro Trader Today