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According to Barclays Capital, gold, silver, platinum and palladium, as well as other commodities, generally stand a
better chance of handling a global economic downturn than other types of investments [because] commodities “are on a very different footing” from two years ago [which they explain in detail below.] Words: 350
So reports the International Business Times (www.ibtimes.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
The article goes on to say:
Here are four key factors to consider in comparing commodities with other types of investments, according to Barclays Capital:
1. Commodities prices are falling this year from a much lower base than they were falling in 2008:
From their June 2008 peak they fell 54 percent to February 2009. “This year, however, prices have proven less volatile and the DJ-UBS total return is down by 13 percent since the start of the year.”
2. A big jump in production for almost all commodities in the last two years:
This means “the cost-driven floor price levels are likely to be more robust in any future downturn than they were in the immediate aftermath of the credit crisis.”
3. Demand for commodities is higher now than in 2008:
Last year global demand for oil hit an all-time high, while global oil demand growth was the second strongest recorded in 30 years. With the exception of tin, global demand for base metals reached record levels last year.
4. Emerging markets are buying more commodities…[which] is likely to provide a floor to further downside prices.
“Our results suggest that those commodities that market participants are likely to view as most exposed to a recession are livestock, gasoil and KBOT wheat, while platinum, cotton, lead, carbon and cocoa are likely to be viewed as more “protected,” the Barclays note said.
*http://www.ibtimes.com/articles/228250/20111010/gold-price-silver-platinum-palladium.htm