Why are Commodities Worth Investing in Right Now?
COVID-19 induced financial uncertainty, which turned the commodity industry extremely attractive for the investors and the prices were rising rapidly. The pandemic crisis made a lot of investors reconsider their investment strategies as the international stock market was showing huge uncertainty over the last few years.
However, 2020 did not come out that bad for commodities. The low-interest rates made the price of gold rise by about 16.8% US dollars in August, which made it more appealing than the other major assets in the market. Gold can be considered a good insurance policy during economic stagnation, particularly when the value of the dollar goes down. The decreasing value of the dollar has led to the rise in the price of gold and as the fiat currencies are facing devaluation globally, gold prices are expected to rise further.
Another metal that has shown major growth over the past year is silver. Silver touched a significant mark recently, which it had never reached in the last five years. But the position silver holds in different industrial applications is what makes silver an uncredited investment opportunity. Various chemical processes and products make use of this precious metal. Solar panels are a good example of the application of silver.
The economic crisis brought by the pandemic makes it clear that global investors are interested in diversifying their current portfolios. They try to reduce the risk factors and increase decent profits by making use of alternative investment assets. These assets offer some advantages like low volatility, extra regular income opportunities, and good protection against unfavorable market conditions.
Different studies and researches point out that the agricultural and metal sector are about to make good profit in the coming years. The main reason behind this is expected to be the rise in inflation fears due to circumstances like the decrease in interest rates and the ongoing circulation of financial stimulus options by governments around the world as the pandemic has not yet subsided. Thus, commodities will gain huge investments with speculators improving their position, specifically in the agricultural and metal sectors.
Oil is another commodity that has shown some unpredictable interest and the world is waiting to see how quickly the oil prices bounce back. With the emergence of vaccines, international traveling is possible, which is expected to raise the demand for all these commodities.
The energy industry is another sector that expects good investments as the pandemic has forced people to think about a greener world. This trend can be profitable for metals like copper, iron ore, aluminum, zinc, silver, etc. All these are managed by industrial demands and will rejuvenate with the consumer-focussed catalyst and advancing infrastructure investment like green technologies.
Countries like India and China are investing huge amounts in worldwide infrastructure projects and these projects will increase the demand for different natural resources, which will increase the price of the commodities. The coming years can be crucial for the commodity market and there is no doubt that it can be the right time to make some profits from investing in different commodities.