Some thoughts on commodities

With commodity prices appearing to have entered their "apocalyptic" (over-sold) phase, we thought it timely to put together some thoughts around commodity investing in general and the Commodity Plus Fund in particular.

This link shows a very short summary of some of the main points of our analysis.  The complete document discusses a wide range of issues including  the continued linkage to inflation,  historic parallels to today's environment and the marginal production cost of oil.  Please email us for a copy of the full paper.

The cash allocation ability of the Commodity Plus Fund has worked very well, protecting us from most of the downside from commodities over the last year.  After such a massive capitulation (sell off) in 2015 we expect commodities to rebound in 2016.  With prices below the cost of production for a range of commodities, a supply response (reduced output) is expected.  Historically commodities move in clear down and then up trends - they are one of the most cyclical asset classes. 

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