Commodities anyone?

[FunnyDjo]

I had USO.
Since how long did you hold it ?
What was your gain compare to current WTI or Brent prices ?

[ulysses]

+2,5% over the past 4 months.
WTI/Brent prices are trading lower than in August so I can’t complain about it performance wise. However it already has a 1% expense ratio, plus now with the tax amendments seems like it’s time to swap to a cheaper product.

EDIT: what I liked about it is that it’s a very diverse fund, not limited to oil or natural gas. Plus is rebalanced monthly from a basket of futures (USCI - United States Commodity Index Fund - Commodity ETF).

[Cortana]

@Bojack

Edit: I gave it a second thought and have yet another theory. In 1971, the USA ended the USD to gold convertibility at $35 per ounce, thus ending the Bretton Woods system. Since then, the gold price has been freed and private gold ownership liberalised. So somewhere between 1971 and 1979, gold reached its fair price and then went into a bubble. So if a fair price of gold is something like $1000 (inflation adjusted), then gold indeed ain’t a good long term investment.

This.

One should exclude the 70s for gold charts. The real return since 1980 is negative or basically zero, so it‘s a bad investment IMO if you want more than just an inflation hedge.

[wavemotion]

Gold performed well in 2022, and it should be the same in 2023

Gold Remains One of the Best Performing Assets of 2022 - U.S. Global ETFs

[ulysses]

if you want more than just an inflation hedge. Blockquote

Exactly that. Without being solely exposed to Gold, Oil and Natural gas (very volatile recently).

Problem is, most interesting commodities ETFs that were actual alternatives to USCI seem to be in the PTP 10% withholding tax list (Withholding on Publicly Traded Partnerships (“PTPs”) Effective Jan 2023 | Knowledge Base).

[Zerte2]

An indicator for Gold can be the average mining costs. It is not a “hard floor” since the costs are very different depending on the mine, country, etc. If the gold price falls, it will hamper the development of “expensive” mines, thus leading to a lower average cost. But it helps locating a bit the price between 0 and the infinity .

[yetanothername]

In his video “The Ultimate Inflation hedge” Ben Felix finds based on empirical data that

Commodities are the best, but they are as hard to time as anything else.

Also, consider that over a 20-30 year period, stocks perform best. So, if you have a long investment horizon you can safely ignore commodities as an asset class.

So commodities are only for those investors who

• either want to time the market in the short to medium run,
• or who are looking for diversification in their overall asset allocation.

In any case, if you want exposure to commodities, why not invest in companies producing commodities?

In Search of the Ultimate Inflation Hedge