Three Commodity Investments to Purchase for Income and Inflation Protection

Three commodity investments to purchase for income and inflation protection also offer opportunities to fend off market pullbacks.

Investors may be enticed to diversify into copper and gold, among other metals, as the recent rise in the share prices of oil stocks that could be hitting a short-term peak, according to a new analysis from BofA Global Research. Gold is starting to shine more brightly and is showing signs of a new rally after topping out at $2,078 per ounce in August 2020.

Oil prices for WTI Crude dipped $0.69 per bbl. on Friday, Feb. 18, sliding 0.75% to close at $91.07 at the time of this writing. Investors may want to scale back on their ownership of black gold and increase their holdings in gold and other metals that are showing signs of appreciating, BofA wrote in a recent research note.

The appeal of gold will shine even more if it breaks above $1,860-$1,880 per ounce, according to BofA. The price of gold reached 1897.25 at press time Friday evening, Feb. 18, so gold has passed the threshold that BofA set to signal a buy.

Consumer prices, including oil, have jumped at the fastest pace in four decades. The U.S. Labor Department reported on Thursday, Feb. 10, that prices in January 2022 soared 7.5% in the past year. It marked the biggest pop in prices since 1982.

Three Commodity Investments to Purchase for Income Offer Hedge of Russia’s Aggression

Oil prices have climbed in recent weeks as the number of Russian troops along the border of Ukraine have surged from roughly 130,000 to more than 150,000. U.S. President Joe Biden and other U.S. officials have urged all Americans to leave Ukraine immediately.

President Biden said from White House on Friday afternoon, Feb. 18, that Russian troops now have Ukraine “surrounded.” He warned Russia was targeting Ukraine’s capital of Kyiv. Russia’s President Vladimir Putin is insisting that the United States and the North Atlantic Treaty Organization (NATO) agree to deny Ukraine membership in the military alliance, regardless of what its citizens want.

Russian military hackers carried out a series of cyberattacks on Feb. 15 against the websites of the Ukrainian army, its defense ministry and major banks, U.S. and U.K. government officials said. A series of distributed denial of service (DDoS) attacks briefly knocked Ukrainian banking and government websites offline. That hacking could be a precursor to a direct military strike by Russian forces, President Biden warned.

“Make no mistake, if Russia pursues its plans, it will be responsible for a catastrophic and needless war of choice,” President Biden said. “The U.S. and our allies are prepared to defend every inch of NATO territory from any threat to our collective security, as well.”

Claims by Putin and the Kremlin on Feb. 15 that the country was withdrawing some troops from near Ukraine’s borders could not be verified and were followed by independent satellite images that showed increased hostile troop deployment along Ukraine’s borders. Media reports indicate Russia’s President Vladimir Putin had told his military forces to be ready to invade Ukraine. Biden said he believes Putin has decided to attack Ukraine, Russia’s natural resources-rich neighbor. Ukraine’s President Volodymyr Zelenskyy called for a national day of unity on Feb. 16.

Three Commodity Investments to Purchase for Income Feature Freeport-McMoRan

With Ukraine’s economy and production of minerals imperiled by Russia’s threats, the price of commodities could rise further if the supply is trimmed. The situation has gained keen interest from investment forecasters.

Mark Skousen, PhD, the leader of the Forecasts & Strategies investment newsletter, as well as the Five Star Trader, TNT Trader, Fast Money Alert and Home Run Trader advisory services, recently recommended Freeport-McMoRan Inc. (NYSE: FCX), a giant international copper, gold and oil producer headquartered in Phoenix, Arizona. With the price of copper, gold and oil climbing, Skousen expects FCX to benefit. Plus, the stock is selling for just 12 times expected earnings and its dividend recently was increased.

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Zacks’ Research Daily reported on Feb. 14 that shares of Freeport-McMoRan have gained 6.9% in the last three months, compared to a loss of 8.3% in the Zacks Mining – Non Ferrous industry. Zacks forecast that Freeport’s initiatives to reduce debt will help its financial position.

Freeport is pursuing exploration activities near its existing mines with a plan of expanding reserves to support additional future production capacity, Zacks reported. The mining company further is well-positioned to benefit from automotive electrification, which is positive for copper, since electrical vehicles are copper intensive.

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Three Commodity Investments to Purchase for Income Amid Rising Copper Prices

“Higher copper prices also are expected to support margins,” Zacks concluded. “FCX’s margins are likely to be further supported by reduced interest rates.”

Barron’s magazine reported on January 14, 2022, that miners have begun 2022 strongly and Freeport-McMoRan could be the “big winner.”

“With the price of copper, gold and oil climbing, I expect FCX to renew its upward trend,” wrote Skousen, who has been named as one of the world’s Top 20 living economists by www.superscholar.org. “It is selling for only 12 times expected earnings and recently raised its dividend.”

Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz.

Three Commodity Investments to Purchase for Income Include Rio Tinto

Goldman Sachs is forecasting a “commodities supercycle” that would feature a boom in industrial commodities such as copper, iron ore and minerals that potentially could last for decades. The prediction is gaining fans.

Jim Woods, who writes the Successful Investing and Intelligence Report investment newsletters, and leads the Bullseye Stock Trader and High Velocity Trader advisory services, concurs with Goldman Sachs’s analysis. Woods wrote to his Bullseye Stock Trader subscribers recently that he liked the investment firm’s view that “copper is the new oil.”

Copper prices have surged to $4.50 per pound and could move higher to spur new infrastructure spending around the globe, Woods wrote. Plus, copper is indispensable in global decarbonization strategies, he added.

Woods said a good way to take advantage of the boom in copper and industrial metals is through Rio Tinto PLC (NYSE: RIO), a global mining giant that searches for, and extracts, a variety of minerals from places such as North America and Australia. Iron ore is RIO’s dominant commodity, with lesser contributions from copper, aluminum, gold, industrial minerals and even diamonds, he added.

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“I am old enough to recall the company’s 1995 merger of RTZ and CRA, via a dual-listed structure, which created the present-day RIO,” Woods wrote to his Bullseye Stock Trader subscribers. “Today, the two operate as a single business entity.”

Rio Tinto Rises to Become One of Three Commodity Investments to Purchase for Income

Rio Tinto is in the top 1% of all public companies in terms of earnings per share (EPS) growth over the past several quarters and years, Woods wrote. Last quarter, the company grew its EPS by 156% year over year. The company is scheduled to report its latest results on Feb. 23.

“As for share price performance, RIO has really shown its mettle over the past three months, as the share price has spiked nearly 30% over that period,” Woods noted. “Over the past 52 weeks, RIO remained in the top 13% of all public companies in terms of relative price strength.”

On a technical trading basis, RIO shares now are breaking out to new 52-week highs after forming a bullish cup-with-handle chart pattern, Woods observed.

Paul Dykewicz meets with Jim Woods, who leads Bullseye Stock Trader.

Pension Fund Chair Chooses One of Three Commodity Investments to Purchase

Bob Carlson, a pension fund chairman who also leads the Retirement Watch investment newsletter, said he recommends investing in three funds that offer exposure to commodities. The one dividend payer among them offers a basket of inflation hedges through DWS RREEF Real Assets (AAASX). The fund diversifies among gold, broad commodities, real estate investment trusts (REITs) and Treasury Inflation-Protected Securities (TIPS).

DWS RREEF Real Assets tactically changes the allocation among these sectors based on the economic cycle. The fund also adjusts the holdings within those broad sectors based on detailed reviews by its analysts, Carlson counseled.

The fund is down 2.32% in the last four weeks, 0.23% over three months and 2.54% for the year to date. But it is up 19.49% over 12 months.

Pension and Retirement Watch chief Bob Carlson takes questions from Paul Dykewicz.

Gold started 2022 better than it ended 2021 but still hasn’t established the positive breakout Carlson said he expected to occur amid rising inflation. Threats of international conflicts also should boost gold’s price, along with a decline in the U.S. dollar, Carlson continued.

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A Non-Dividend-Paying Commodity Fund to Consider Is IAU

Carlson also spoke well of non-dividend-paying iShares Gold Trust (IAU) as a “very liquid, low-cost way” to invest in the precious yellow medal. IAU is down 0.38% in the last four weeks and 0.85% so far in 2022. But it is up 0.85% over three months and 0.61% over 12 months.

Gold is a traditional hedge against inflation. IAU is showing signs of rebounding and now could be a good time to buy, Carlson counseled.

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Another non-dividend-paying fund that Carlson likes is a pick in his Invest with the Winners portfolio of his Retirement Watch newsletter. That one is Invesco DB Commodity Tracking (DBC), up 8.15% over the last four DBC weeks, 9.87% for the year to date and 44.59% over the past 12 months.

Carlson monitors several models that try to identify from among a diversified group of exchange-traded funds (ETFs) the one with strong recent returns and is likely to continue earning above-average returns for at least another month.

“Each month, the portfolio is positioned in either one ETF or cash,” Carlson wrote. “The strategy, on average, makes a trade every two to three months, though in 2020, it held a gold ETF for most of the year.”

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COVID-19 Concerns Lead CDC Director to Champion Indoor Mask Wearing

Even though new COVID-19 cases and hospitalizations are easing, more than 2,000 people in American still die each day from the virus. As of Feb. 16, the United States was averaging 151,056 new COVID-19 cases, according to Johns Hopkins University.

It marks a 44% drop from last week, as new cases have fallen to one-fifth of the high of 800,000-plus cases per day a month ago. However, the chief of the U.S. Centers for Disease Control and Prevention (CDC) is standing by the agency’s indoor mask-wearing guidelines, advising not to change the recommendations or loosen restrictions aimed at fighting COVID-19. CDC Director Dr. Rochelle Walensky said students should wear well-fitting masks indoors consistently at school, along with people who spend time in public indoor settings amid high or “substantial transmission.”

The continuing COVID-19 threat is leading many people in America to obtain COVID-19 boosters. However, more than 60 million people in the United States remain eligible to be vaccinated and have yet to do so, said Dr. Anthony Fauci, the chief White House medical adviser on COVID-19.

COVID-19 Cases in America Top 78 Million and Cause More than 933,000 Deaths

As of Feb. 18, 252,650,507 people, or 76.1% of the U.S. population, have received at least one dose of a COVID-19 vaccine, the CDC reported. Those who are fully vaccinated total 214,602,856, or 64.5%, of the U.S. population, according to the CDC.

COVID-19 deaths worldwide, as of Feb. 18, topped the 5.8 million mark to hit 5,872,338, according to Johns Hopkins University. Worldwide COVID-19 cases have soared past 421 million, reaching 421,348,262 on that date.

U.S. COVID-19 cases, also as of Feb. 18, topped 78 million, totaling 78,372,010 and causing 933,808 deaths. America has the dreaded distinction as the country with the most COVID-19 cases and deaths.

The three commodity investments to purchase for income and inflation protection could entice those who seek to acquire shares before their prices might spike. Investors also may want to heed the warnings of President Biden that  Russia’s recent severe cyber attacks and false claims against Ukraine and its peace-loving people are part of a misguided Putin plan to invade the country that could occur within days or weeks.