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To get an appreciation of how important commodities are to our daily lives, all you need do is take an inventory of all the products you use everyday made from commodities. You can start your list with the computer you're reading this article on. Not only is it made of several commodities but in order to power it up and bring information to you over the internet needs commodities.
Look around your home at all the various devices made from or that work due to commodities and your list continues to grow. Not only do they make devices run, they also make us run as the foods we eat are commodities. Much of our day is spent at work and regardless of where you work practically everything you do requires commodities.
Those of us that live in the developed economies of the world owe much of our modern conveniences a big thank you to commodities, without them our lives would be much different. It's also important to remember there are a few billion people in the developing economies that live much less modern lives than those in the developed economies.
People in developing economies live simpler lives but are starting to be introduced to all the various products those in the developed economies enjoy. They have a growing hunger for them and in the future more will have these products.
Commodities do not have infinite supply and every year we consume enormous amounts and this will only grow as those in the emerging economies modernize. As one starts to appreciate the realities of how important commodities are to our lives then consider there are many ways for investors to include these important assets in their portfolios.
One can invest through the futures markets that can sometimes scare people because they seem complicated. To learn more there are several courses put on by the exchanges that trade commodities. Exchange traded funds are another option, they are kind of like a mutual fund that invests in commodities and tracks the movement in commodity prices. One can also look at investing in publicly traded companies focused on commodity production, development and exploration.
There are plenty of options to learn about the various investment opportunities. Education is crucial, so do your homework, this is important no matter what investment you're considering. Commodities are essential to our daily lives and with billions of new consumers, starting to enjoy the many products made from or that run using commodities, will provide decades of strong demand in the future.
As you understand how integral commodities are to our daily lives and consider demand growth from emerging economies it becomes much clearer commodities are also a very important investment class to consider. Long term supplies for several commodities are in poor condition due to many years of under investment that has seriously impaired long term supply. New consumers will increase demand and with the relatively weak supply chains makes a strong argument that prices will be much higher in the future.
Doing an inventory of all the products, we use made from or that need commodities to make them run, will make it clear how important they are in our lives. With many new consumers competing for commodities that have relatively weak supply will drive prices much higher. These are important reasons to keep in mind when considering commodities as an investment.
