Good to have you back aboard The Financial Wagon! Inflation’s still biting, but today we’re exploring two time-tested shields against it — commodities and gold — and how to use them wisely in your portfolio.
Today’s Post
🪙 Commodities and Gold — How to Use Them as Inflation Hedges
If you’ve been grocery shopping or paying rent lately, you already know — inflation is still eating away at your money. The $100 that once filled your cart now barely covers essentials. And while central banks keep promising “stability,” smart investors know it’s better to prepare than to hope.
That’s where commodities and gold come in. They’re the classic tools for protecting your wealth when prices rise and money loses buying power. But before you run out and start hoarding gold bars, let’s break down why these assets matter — and how to use them wisely.
💡 What Exactly Are Commodities?
Commodities are raw materials that the world runs on — think oil, gas, gold, wheat, coffee, or copper. They’re traded globally, and their prices often rise when inflation increases.
Why? Because commodities are inputs. When the cost of production materials goes up, those higher prices eventually hit consumers. So if inflation means everything costs more, the value of the stuff used to make everything — commodities — tends to go up too.
There are four main types:
Energy: Oil, natural gas, coal
Metals: Gold, silver, copper, platinum
Agriculture: Corn, wheat, soybeans, coffee
Livestock: Cattle, hogs, poultry
Investors use them not to get rich overnight — but to protect purchasing power during inflationary times.
🏆 Why Gold Is the “King of Safe Havens”
Gold isn’t just shiny jewelry — it’s financial insurance. For centuries, gold has been a store of value, meaning it holds purchasing power even when currencies lose theirs.
When inflation surges, interest rates rise, or markets panic, investors rush to gold because:
It’s limited in supply (you can’t print more of it).
It’s recognized globally as valuable.
It often moves opposite to the stock market, helping balance your portfolio.
Historically, during periods of high inflation, gold has performed well:
In the 1970s, when U.S. inflation hit 13%, gold rose nearly 1,400% that decade.
During 2008–2011, as central banks printed money after the financial crisis, gold jumped over 70%.
That said, gold isn’t about huge returns — it’s about protection.
How Commodities Help Hedge Inflation
Commodities tend to move with inflation, not against it. When demand rises and the cost of goods goes up, so does the price of materials.
For example:
If oil prices increase, energy companies make more profit — and so do commodity investors.
If food prices spike, agricultural commodities gain value.
In 2022, global inflation averaged over 8%, and the Bloomberg Commodity Index climbed more than 20% in response. That’s proof that commodities can serve as a real-time inflation shield.
⚖️ How Much Should You Invest?
While commodities can help protect wealth, they shouldn’t dominate your portfolio. Most financial planners recommend 5–10% of your total assets in gold and/or commodities.
Here’s a simple framework:
Goal | Allocation Example | Investment Options |
|---|---|---|
Inflation hedge | 5–10% in gold or diversified commodity ETFs | SPDR Gold Shares (GLD), iShares GSG, Invesco DB Commodity Index (DBC) |
Broader exposure | Add 3–5% in energy or metals funds | XLE (Energy ETF), CPER (Copper ETF) |
Physical ownership | Buy gold coins/bars for long-term holding | American Eagle, Maple Leaf, or Credit Suisse bars |
💬 Tip: Physical gold offers psychological security, but ETFs and funds offer convenience, liquidity, and diversification.
⚠️ The Downsides to Know
Nothing in finance is a magic bullet — and gold/commodities are no exception.
No income: Unlike stocks or real estate, they don’t pay dividends or rent.
Volatility: Commodity prices can swing wildly with global events.
Storage & security: If you hold physical gold, you’ll need a secure place to keep it.
Timing risk: Buying after a big inflation spike can mean overpaying.
So treat these as stabilizers, not your main engine of growth.
💬 Pro Tip: Combine, Don’t Rely
The smartest investors don’t pick “gold vs. stocks” — they hold both.
Think of gold and commodities as your financial seatbelt. You don’t wear it because you expect a crash — you wear it just in case.
A balanced approach might look like this:
70% stocks & bonds (for growth)
20% real estate or alternatives (for stability)
10% gold/commodities (for inflation protection)
That mix keeps your portfolio resilient, no matter what the economy throws at you.
🧭 Final Thoughts
“Gold is money. Everything else is credit.” - J.P. Morgan
When paper money weakens, tangible assets shine.
You don’t need to bet your future on gold bars or oil futures — but adding a touch of commodities can help your portfolio weather inflation’s punch.
The goal isn’t to predict the economy — it’s to prepare for it. And in a world where prices are anything but stable, a little golden insurance might just be worth its weight.
That’s All For Today
I hope you enjoyed today’s issue of The Wealth Wagon. If you have any questions regarding today’s issue or future issues feel free to reply to this email and we will get back to you as soon as possible. Come back tomorrow for another great post. I hope to see you. 🤙
— Ryan Rincon, CEO and Founder at The Wealth Wagon Inc.
Disclaimer: This newsletter is for informational and educational purposes only and reflects the opinions of its editors and contributors. The content provided, including but not limited to real estate tips, stock market insights, business marketing strategies, and startup advice, is shared for general guidance and does not constitute financial, investment, real estate, legal, or business advice. We do not guarantee the accuracy, completeness, or reliability of any information provided. Past performance is not indicative of future results. All investment, real estate, and business decisions involve inherent risks, and readers are encouraged to perform their own due diligence and consult with qualified professionals before taking any action. This newsletter does not establish a fiduciary, advisory, or professional relationship between the publishers and readers.