Trading commodities has been popular for many years, as investors can use a number of different resources to gain access to their favorite commodity investments. But it was only a more recent development that commodities earned their keep in a long-term portfolio. Now, a small, but important, allocation to commodities is a necessity of any well diversified portfolio, as these investments offer a number of advantages such as hedging against inflation and maintaining low correlation levels to traditional asset classes [see also Commodity Investing: Physical vs. Futures].
Today saw major equities finish slightly down, which is to be expected after posting their largest gains in a year yesterday. American government officials continue to debate over a debt ceiling deal, although many are now predicting that the latest plan will need to be revised before it can pass through the Senate. While investors hope for a deal to be struck soon, only time will tell how long it will take for Congress to approve the legislation that will dictate how our nation moves forward with the current debt levels. As a result of this focus on debt, many commodities saw a relatively slow day, as the UBS Bloomberg CMCI index gave up just 1.9 points while the S&P GSCI finished up by about seven points in total.