The Case for Commodities
Why Commodities?
The GSCI Commodity Index and S&P500 Index have certain limitations and Contrarian cannot trade either index. Past results are not indicative of future returns. Risk of loss is substantial. Currently the GSCI Commodity Index includes 24 commodity nearby futures contracts. The S&P GSCI® Commodity Index is a composite index of commodity sector returns representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. The returns are calculated on a fully collateralized basis with full reinvestment.
In a financial landscape currently littered with potential bubbles, Contrarian believes commodities could present a historic value opportunity.
On an inflation adjusted basis, commodities have arguably never been cheaper.
Why Now?
In response to the financial panic during the outbreak of COVID-19, the Federal Reserve has added an unprecedented amount of liquidity into the financial system. Nearly 70% of all the United States Dollars ever created were created in 2020.
We believe the actions taken by global central banks as a result of COVID-19 will result in unexpected inflation in the coming years.
Exposure to commodities could help buoy a portfolio against unwanted inflation.
How much inflation beta do you want? Likely more than what you have.
