When we hear "investing in commodities," most of us immediately think of gold – the eternal symbol of stability and safety. But the world of commodities is much broader and more diverse. Oil, copper, and wheat represent opportunities that can significantly enrich your investment portfolio and offer benefits that gold alone cannot provide. Let’s take a closer look at why these alternatives are worth considering.

Why invest in commodities at all?

Commodities are not just tools for preserving value – they play an important role in a portfolio. First, they act as a hedge against inflation. When goods prices rise, the prices of basic raw materials such as oil, copper, or wheat typically rise as well. These commodities help investors maintain their purchasing power. In addition, they respond sensitively to global economic movements – as the economy grows, so does the demand for energy, metals, and agricultural products. And because of their low correlation with traditional assets like stocks or bonds, commodities are an excellent tool for diversification and reducing portfolio volatility.

Black gold with great influence

Oil is a key commodity whose price is mainly shaped by the global economic cycle and geopolitics. A growing economy increases oil consumption, while a recession pushes its price down. Added to this are factors like international conflicts, sanctions, or OPEC+ decisions, all of which can shake the market. In recent years, pressure for a green energy transition has added uncertainty in the oil sector. On one hand, demand for fossil fuels is decreasing; on the other, investments in new technologies are increasing, leading to price volatility. Investors can gain exposure to oil through various channels – from risky futures contracts, to ETF funds, to shares of oil giants that often offer stable dividends.

Copper connects technology and growth

Copper is indispensable in industry and has rightly earned the nickname "Dr. Copper" for its ability to predict economic trends . It’s essential in electric wiring, motors, and batteries, and is a key component of green technologies – from solar panels to electric vehicles. With growing demand for ecological solutions and ongoing infrastructure development in emerging markets, copper presents an investment opportunity that appeals especially to long-term investors. As with oil, investment options include futures contracts, ETFs, or shares in mining companies.

Wheat as the quiet player in the market

At first glance, wheat might not seem like a dramatic investment, but its importance in everyday life is undeniable. As a staple food ingredient, it's closely tied to food prices and, by extension, food inflation. It’s also sensitive to weather conditions, natural disasters, and geopolitical conflicts – for instance, the war in Ukraine significantly impacted its supply and price. For investors seeking a more stable commodity outside the energy and metals markets, wheat can be a great choice . Investment access is available through futures, ETFs focused on agricultural commodities, or shares of major agribusiness firms.

Diversification beyond gold

Investing in commodities is more than just holding gold. Oil, copper, and wheat offer diverse investment stories that respond to our dynamic world – including energy trends, economic growth, geopolitics, and climate challenges. Including them in your portfolio can provide better inflation protection, diversification, and the potential for higher returns. If this topic interests you, check out our articles on precious metals and the importance of diversification, which offer deeper insights into portfolio protection and proper investment allocation.

Price development of commodity futures over the past 5 years

(Source: Google Finance )*

*Past performance is not a guarantee of future results.