Why You Should Invest in Commodities

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Most investors have probably never fretted about how to add a nice stake in pork bellies or winter wheat to their portfolio. But many have lined up in Costco to buy a gold bar. All such investments are part of the broad asset class of commodities, along with crude oil, coffee, copper and more. Despite impressive run-ups in many commodities this year, some strategists say they’ve still got a long, upward run ahead of them and deserve a spot in your portfolio.

That’s because commodity prices tend to ebb and flow in long cycles, largely governed by human nature, says John LaForge, head of real asset strategy at Wells Fargo Investment Institute. Commodity producers ramp up production when prices are rising, until eventually markets are saturated, or at least so well stocked that profits start to suffer. “It gets to a point where producers aren’t interested in planting an extra acre of corn or producing an extra barrel of oil,” says LaForge. 

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