Commodities: The Play of the Summer

Commodities were a household name last year as we saw a rise in prices all across the board. Usually we can see a rise in oil and gas in the summer as people take vacations. We have seen a rise in commodities for the past month. The question is: how long will it stay?

Agricultural commodities probably will cease to have any high, sustaining rallies. The season to buy fertilizer and crop necessities are over. The only way we see a rally here is if oil soars and everything else follows. Look at commodities into winter for any price declines. Next year looks promising as the economy and market get back on track.

Oil is where you want to focus for the summer as far as commodities go. Last year, oil and the market trading adversely. This year, however, we see oil as a reference point for the economic rebound. The price of oil and inventory levels show signs of economic detail. So, as we see prices rise and inventories fall, the recession appears to be reaching an end if we are not already there yet.

You want to invest in oil service companies. These will rise with oil and will still be great companies with great prospects when oil falls again. There are even mutual funds and ETFs that track nothing but energy that are great plays now. Commodities are down 56% compared to a 32% drop in the S&P since prices topped in July. Whether prices should have been so high is an irrelevant question. The fact is that prices will return. There was a lot of money made in that spike. OPEC and investors everywhere are waiting for that return. To make cash money, you have to know where cash money will be at ahead of time. It does you no good to get there after everyone else.