Looking for Future Commodities Gains in 2014
The commodities market is back with a bang, commodities have been a dwindling investment ever since the collapse of the global economy in 2008, and it has climbed even higher over the last few years. However, the universal commodity demand has been dwindling lately due to the stagnant growth rate of most emerging market economies.
Most experts have speculated a steady growth in commodities in the year ahead. The global decline in commodity prices in the last year could just be the right opportunity for investors to stock up on natural resources that are beginning to show improvement.
The Gradual Collapse of Commodities
2013 was a year of disturbing losses for any investments in the hard assets market. The funds tracking several future contracts of natural resources saw continued deterioration. The iShares S&P GSCI Commodity-Indexed Trust fell by 1.2 percent during the year, while investor performance fell even more low. According to analysts, the global commodity sector of actively managed funds faced colossal losses of approximately 10 percent. The previous three years have seen a continued trend of losses for any investments in commodity mutual funds or ETFs. The sluggish market economies and expectations of a fall in inflation rates can share the blame for the collapse of the hard asset sector.
However, the new year could be promising some commodity funds because of the increasing market growth and several supply constraints. The exports of natural resources from the United States and select European countries have finally seen a boost due to the increasing demand for nickel, steel and other base metals while the demand for fuels and natural gas have grown to new heights. Meanwhile, the low prices of these industrial commodities have led producers to restrict it’s production to control the demand. These restrictions in production of natural resources will affect the hard assets sector in the year ahead. Implying that many industrial commodities could be at the bottom this year and the right time to invest could be now.
Selecting an Optimum bid for Natural Resources
Although, it may seem like a wise decision to invest in broad-based commodities funds or producers-based funds, not all natural resources funds are predicted to earn real returns for investors. It is time for investors to get tactical. Industrial metals are the most promising investments this upcoming year. Ever since the return of the U.S. and European exporters, the sales of metals like copper, zinc and nickel have steadily declined. The prices of these metals have increased since the beginning of this year by about 3.4 percent and the PowerShares DB Base Metals tracks a steady growth in futures contracts of major base metals such as aluminum, zinc and copper.
The growing demand for automobiles has led to an increase in platinum funds such as the ETFS Physical Platinum Shares. This could be a good investment for commodity funds investors as an increase in production of gold,steel, coal and silver is expected in the upcoming year. Another pretty bright option for investors is crude oil production. The current position of the futures-market of crude oil could attain a 10 percent appreciation in prices for investors. This implies that the United States Oil ETFs might finally be worth its while.
Even though the commodities market might seem sluggish or even dead right now, an investment in natural resources should be included in your portfolio. This may be the best way for investors to be tactical and gain an advantageous position in the new year.