SUBSCRIBE: What Is a Commodity? And why do they perform well in inflationary environments?

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In this episode of the “Consider the Source” video series, Omnia Family Wealth Co-Founder and Chief Operating Officer Michael Wagner shares insights on real assets, commodities and why investing and proper diversification is not solely about stocks and bonds.

Wagner specifically explains:

An overview of real assets and commodities
The role real assets and commodities can play in portfolios
How Omnia Family Wealth utilizes real assets and commodities to help families build their wealth
During the video, Wagner emphasizes that while solely investing in stocks and bonds can create an unstable portfolio in an inflationary environment, commodities and real assets can help investors build strong, diversified portfolios, as long as volatility is properly taken into account.

As always, please do not hesitate to contact us with any questions. We are available via email or phone at (305) 602-9080.

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Commodities and Inflation: What you need to know going into 2022

The year 2021 saw a surge in commodity prices, driven by the global economic recovery from the pandemic and supply chain disruptions. As we head into 2022, it’s essential to understand the relationship between commodities and inflation and how it can impact various aspects of the economy.

Commodities are raw materials that are traded in the global marketplace. They include agricultural products such as wheat and corn, energy products such as oil and natural gas, and metals such as copper and gold. These raw materials are essential for the production of goods and services, making them a critical component of the global economy.

Inflation, on the other hand, refers to the overall increase in prices of goods and services in an economy over a period of time. When inflation occurs, the purchasing power of a currency decreases, leading to higher prices for everyday items.

The relationship between commodities and inflation is complex, but there are some key factors to consider. Firstly, as the prices of commodities rise, the cost of producing goods and services also increases. This can lead to higher prices for consumers, contributing to inflation. Additionally, commodities play a significant role in the production of goods, and any increase in their prices can lead to higher production costs, which are often passed on to consumers.

Looking ahead to 2022, there are several factors that could impact commodity prices and inflation. One of the most significant factors is the continued global economic recovery from the pandemic. As economies reopen and demand for goods and services increases, the demand for commodities is also expected to rise, putting upward pressure on prices.

Supply chain disruptions and geopolitical tensions can also impact commodity prices. The global supply chain has been strained by the pandemic, leading to shortages of certain commodities and driving up their prices. Additionally, geopolitical tensions in regions rich in natural resources, such as the Middle East, can disrupt the supply of commodities, leading to price spikes.

Central bank policies and government stimulus measures will also play a role in shaping commodity prices and inflation in 2022. Central banks have implemented accommodative monetary policies to support economic recovery, which has led to lower interest rates and increased liquidity in the financial system. This has the potential to drive up inflation as consumers and businesses have more money to spend, increasing demand for goods and services, including commodities.

So, what does all of this mean for consumers and investors? It’s essential to monitor commodity prices and their impact on inflation as we head into 2022. Rising commodity prices can lead to higher costs for everyday items, eroding the purchasing power of consumers. Additionally, investors may consider diversifying their portfolios to include commodities as a hedge against inflation.

In conclusion, commodities and inflation are intricately linked, and it’s crucial to pay attention to their dynamics as we enter 2022. The global economic recovery, supply chain disruptions, and central bank policies will all play a role in shaping commodity prices and inflation in the coming year. Being aware of these factors can help consumers and investors make informed decisions in a potentially challenging economic environment.