The “Natural“ Investment for 2019
By StoneX Bullion
It seems that there is a resurgence of investment back into the natural resource market. It is expected that investment into natural resources such as gold, silver, agriculture will most likely exceed that of a 100 billion USD in 2019. Natural resource related assets have historically shown positive diversification benefits relative to traditional asset classes. Each individual commodity experiences its own volatility based upon their respective supply and demand curves however, there are opportunities to generate attractive returns in this industry.
Gold see-sawed in 2018 but ended the year buoyant, regaining its strength against the stock market and investors are seeing gold as a major investment choice due to the economic uncertainty that exists. Demand for natural resources has correlated with economic growth, but there are more factors such as population growth, environmental change and advances in technology all have a part to play. In countries like China and India rising incomes drive demand for basic consumer goods. Demand is also increasing for better services and there is a greater diet diversification. Spending on infrastructure in the developing world is estimated to be about 8 Billion USD and replacement of such infrastructure should create tremendous demand for commodities. An expanding global population drives the necessity for natural resources such as food. The United Nations has projected a world population of about 8.9 billion in 2050. In emerging countries, the jewellery trade is alive and growing because people appreciate gold due to its reputation as a store of value, but also because of the status it brings to the owner.
Natural resources present many opportunities for business from improving resource efficiency or introducing new product lines. Governments have increasingly invested more in natural resources due to the pending global inflation in the near future. Due to natural resources, being commodities they are less affected by stock market fluctuations and can act as a natural hedge. Of course, as with any set of investments, natural resources as an investment option carry certain risks and it is all about the effects of supply and demand.