This week featured a fair amount of volatility as markets weighed in on European woes as well as the worsening debt situation at home. Congress has just days to pass a massive budget deal, but each day that goes by brings more pressure on commodities. This past week saw crude oil smash through the century mark, though it fell shortly thereafter, for the first time in months. Though crude has been on a tear as of late, its high correlation to equities paints an uncertain short-term outlook for the precious fossil fuel. Gold had yet another frustrating week as its returns remained highly correlated to stocks, taking away the safe haven appeal that many are drawn to.
With a wild week nearly in the books, we outline the three best commodity stories from around the web:
With Libya’s Oil Coming Back Online, Investors Are Offered Opportunities at Hard Asset Investor:
The past year has seen unrest in many of the world’s important oil producing nations. This has put a major pressure on the fossil fuel, causing the smallest blips in supply and demand to have outsized effects on the price of the underlying commodity. One of the most important countries that saw crude production drop was Libya. Though the nation accounts for just 2% of global supply, their oil output is significant for other reasons. This article, by Amine Bouchentouf, outlines the importance of Libya’s oil, and how investors can make a play as the country’s oil comes back online.
When it comes to commodity investing, ETFs have been an instrumental tool for increasing exposure for even the most basic investors. Now that these vehicles have grown in popularity, the growth aspects over the next few years has surged. According to S&P Indices, the next five to seven years will see assets in commodity-backed ETPs nearly triple to $10 billion. This article, by Sungwoo Park, outlines the growth that these products will see and why Asia will play such an instrumental role.
Gold And Silver In A Correlation Bubble? at CommodityHQ:
Gold an silver have long been known as important safe haven metals, as they tend to offer important diversification benefits for a portfolio. But one of the many reasons that investors like these two metals is because they are often advertised as featuring low correlation to stocks. But a quick glance over the past few years has proven this notion to be altogether untrue. This article outlines gold and silver’s high correlation to equities to educate investors on the diversification they are actually receiving from these investments.
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Disclosure: No positions at time of writing.