Can Commodity ETFs Hedge Your Everyday Expenses?
Although the concept of “hedging” has been stretched, abused, and otherwise manipulated over the years, it is nevertheless a very important process for many companies. Commodity producers use forwards and futures contracts to help ensure a certain level of cash flow, and corporate commodity consumers use hedging to help control costs. So here’s a thought – can regular people use commodity investment products like ETFs to hedge some of their everyday costs of living?
Five Natural Gas Picks with Significant Upside Potential
Just under four years ago, natural gas prices in the United States traded around $10 per futures contract. Just a few months ago, the price had plummeted to right around $2. There has been a slight recovery to above $3, but prices are still considered severely depressed from a historical context [for more natural gas news and analysis subscribe to our free newsletter].
A Deeper Look At America’s Commodity Industry
According to the CIA World Fact Book, the United States operates the largest single-country economy in the world. Its gross domestic product for 2011 was estimated at $15.3 trillion, trailing the European Union, which is comprised of 27 different countries, by only $360 billion. China remains in third place, as the developing economy continues to see rapid growth in recent years due to its build out of industrial capacity and its growing class of individual consumers. Growth in the U.S., however, remains subdued below 2%. The global economic slowdown has certainly hampered the nation’s growth, but there still remains a few economic bright spots, namely the advancement of domestic energy production [for more commodity news and analysis subscribe to our free newsletter].
