Investing in Commodities

[bak875]

Dear All,

I would just people's opinion on this:

I'm thinking of investing in a Equities Resource Fund which includes the development, extraction processing or distribution of minerals, water, metals, timber, oil coal, gas nuclear energy and renewable energy.

With growth levels of China and India picking and the falling U.S. dollar. I would think this would be a wise investment. Not to mention what Jim Rogers keeps going on and on about with regard to "the commodities boom" and that "commodities will lead the way" and that the fundamentals of commodities keeps getting stronger.

Do you agree?

[jimlit]

I agree with most of what Jim Rogers says actually, especially his views on USD (and GBP for that matter). Certainly if I had a lot of cash dollars, I'd be looking to at least hedge some risk by buying some gold.

I think we may well see an inflationary-fuelled equity bubble too though (in the US), in which case picking some **fundamentally healthy** companies might yield good returns too.

But Rogers is right about fundamentals, IMHO.

[PDLM]

I would be wary of complex funds unless you can be sure that they do genuinely and accurately really track the prices of the underlying commodities. A lot of money can disappear to intermediaries managing the derivatives that sit between the funds and the actual physical commodities.

IMO a better way is to invest in the shares of companies linked strongly to the commodities you fancy. But in many cases you've missed the boat on that one. Lots of mining and resources companies are up 2-600% this year already.

[bak875]

Thank you both for your opinion and insights.