Gold and other commodities have been used as a store of value for centuries. When the economy gets shaky or inflation rises, many investors turn to these assets as a safe haven. But investing in commodities is different from investing in stocks or bonds, and it’s important to understand how it works before diving in.
Gold is the most well-known commodity, and it’s often seen as a hedge against inflation or currency weakness. You can invest in gold in several ways: buying physical gold (like coins or bars), investing in gold ETFs, or purchasing shares of gold mining companies. Each method has its pros and cons—physical gold gives you direct ownership, while ETFs and stocks are more liquid and easier to manage.
Besides gold, other commodities include silver, oil, natural gas, corn, and even coffee. These resources are traded on global markets and are influenced by supply, demand, weather, politics, and economic growth. Some investors use commodity ETFs or mutual funds to get exposure, while others invest through futures contracts, which can be riskier and more complex.
While commodities can help diversify your portfolio and protect against certain risks, they’re also very volatile. Prices can swing dramatically in short periods. Because of this, they’re best used as a small part of a broader investment strategy. If used wisely, commodities can offer balance and security in uncertain times.
