329- From the Vault: Investing in Commodities
Physical commodities are investments that you physically own, such as gold, silver, natural gas, and oil.\xa0\nA commodity stock has several key attributes:\n\xa0\n\nIts products compete primarily on price, but it is not a low-price competitor.\n\nIts products are the same as another company\u2019s products.\n\nIt has no brand identification.\xa0\n\nIt can\u2019t raise its prices with inflation or increasing costs.\xa0\xa0\n\n\nLet\u2019s take gold for example. The practice of investing in gold goes way back, but that doesn\u2019t necessarily mean it\u2019s a great investment. Gold\u2019s price is based on scarcity and fear, which can be impacted by political actions or environmental changes.\xa0\n\nIf you are investing in gold, be aware that your protection against a price drop, your moat, is based on external factors so the price can fluctuate a lot, and quickly. The price tends to go up when scarcity and fear are abundant and down when gold is widely available and fear is abated.\n\nIf you think the world is going to be a more fearful place in the future, then gold could be a good investment for you. But this isn\u2019t the case for everyone.\xa0\n\nIn this vault episode of the InvestED podcast, Phil and Danielle delve further into commodities and discuss what sets them apart from other types of investments.\n\nIf you want to learn more about how to pick the right investments for you and your lifestyle, check out this guide where Phil explains these principles more in-depth: https://bit.ly/3CGUQkf\nTopics discussed in this episode:\n\nValuation methods of investing\n\nTypes of investments\n\nHow to pick stocks\n\nCommodity stocks\n\n\xa0\n\xa0\n\n\xa0\n\xa0\n\xa0\nLearn more about your ad choices. Visit megaphone.fm/adchoices