From my personal notes

  • Commodities is a good hedge for inflation but it is not a good hedge for recession (except for gold). 

  • Gold is the only commodity that has positive return during recession.


Commodities goes up when:

  • High Inflation - As prices for goods and services rises during inflationary periods, so do the prices of the raw materials required to produce them. 

  • Currency Weakens - Since most commodities traded in international markets are priced in U.S. dollars, a weaker dollar means higher commodity prices As the dollar falls in value, it takes more weaker dollars to purchase a commodity, driving the commodity's price higher.

  • Supply and Demand - Strong economy or shortage in supply.