Commodities Are A Good Long Term Investment – The Factors

Commodities are a good long term investment because they are an investment in the global growth story.  Since the 2008 financial crisis, the world economy has struggled to maintain a period of strong economic growth, with economic growth accelerating and decelerating a number of times.  Commodities have generally followed the changes in the rate of world economic growth, generally moving up and down as demand for commodities increased and decreased in conjunction with the strength of the world economy.

With billions of people in the developing world working their way towards higher standards of living, global growth and demand for commodities should be strong in the long term, which is why commodities are a good long term investment.  As standards of livings rise, demand for commodities, from oil to corn, rise to meet more demanding lifestyles, which in the long run should cause the price of commodities to rise since supply of commodities is usually limited or only grows slowly.

Commodities Are A Good Long Term Investment – How To Invest

The following are broad based commodity Exchange Traded Funds (ETFs) that can be purchased via regular brokerage accounts, if one believes that commodities are a good long term investment.  The last two provided are leveraged broad based commodity ETFs that are designed to change in price at a two to one (200%) ratio, based on their underlying commodity investments.

• PowerShares DB Commodity Index Tracking Fund (DBC) – DBC tracks changes in the level of the Deutsche Bank Liquid Commodity Index – Optimum Yield, by investing in a portfolio of exchange-traded futures commodities, including light sweet crude oil, heating oil, gasoline, natural gas, Brent crude oil, gold, silver, aluminum, zinc, copper, corn, wheat, soybeans, and sugar.

• iShares GSCI Commodity-Indexed Trust Fund (GSG) - GSG is designed to replicate investment results that correspond generally to the performance of the S&P GSCI Total Return Index, which includes investments in a broad array of commodities futures contracts, with a concentration on agriculture and energy commodities.

• ProShares Ultra DJ-UBS Commodity (UCD) - UCD is designed to provide daily investment results that correspond to twice (200%) the daily performance of the Dow Jones – UBS Commodity Index, which includes investments in a broad range of commodities futures contracts and financial instruments.

• PowerShares DB Commodity Double Long ETN (DYY) - DYY is designed to provide daily investment results that correspond to twice (200%) the daily performance of the Deutsche Bank Liquid Commodity Index – Optimum Yield. DYY reflects changes in the price of crude oil, heating oil, corn, wheat, gold, and aluminum commodity futures contracts.

The commodity ETF ideas provided above are for broad based commodity investing using ETFs, if an investor believes that commodities are a good long term investment and they want to diversify their investment in commodities to include a broad range of commodities.

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