Abstract: We highlight recent arguments for favorable macro conditions for commodities investments, including cyclical properties, inflation hedging characteristics, and global demand and consumption matters. We then discuss recent arguments for the case that there are inherent returns in commodities that are similar to equity returns. We then note, however, that while both short and long-term studies support the existence of inherent return in the asset class, their research relies largely on passive, long-only commodities exposure via futures in Total Return ndexes.
Introduction: The Federal Reserve has a variety of tools available to manage valuation and promote stability. Similarly, central banks can massage interest rates to address economic concerns like inflation and deflation. Companies, also, can address many near-term over- or under-performance matters through a variety of corporate actions. When a drought damages a grain crop on a large-scale basis or a hurricane destroys a key energy distribution channel, however, governments, banks, and companies often have limited options to encourage short-term stability in commodity markets. Even Alan Greenspan can’t make more corn…
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