Making money from rising commodities is a great way to offset the higher prices you have to pay for everyday goods as a result of the recent so called commodities boom. Many people have noticed the following goods becoming much more expensive recently:
- Food. Increased prices of traded commodities such as wheat, grain, pork, sugar, soya, rice have all come about as a result of poor harvests around the world, increased transportation costs (due to higher oil prices) and increased demand from the rapidly growing middle classes in the Indian and Chinese economies.
- Fuel. Increases in oil prices have pushed up gasoline prices significantly over the last 12 months. This has a knock on effect on any goods that we buy that are transported such as clothing, food stuffs, consumables (particularly those manufactured a long way way such as in China). In addition the cost of personal travel, particularly by air has also increased due to fuel costs, making personal and vacation travel much more expensive.
For many the above increased costs result in a decrease in their disposable income. The best course of action is to make investments that have exposure to rising commodities prices, allowing you to offset or even profit from these changes.
There are many different ways to gain exposure from these gains in commodities. To ensure you get the maximum benefit it is crucial you research well before making any investments and choose the right kinds of investments. Simply investing in the stock of an oil company may not be the best way as such stock prices are still heavily related to the overall performance of the stock market which is currently in a downward cycle.