One Dead-Money Asset Is Finally Breaking Out

By Brett Eversole

It's not easy to find an asset class that has been "dead money" for decades...

That's doubly true if it's enjoying growing demand and essentially powers the global economy as we know it.

Right now, though, all of this is true of one asset class... commodities.

As unbelievable as it sounds, the benchmark commodity index is at the same value today as it was in 1979. That's 45 years of dead money. So it's no surprise investors don't pay much attention to commodities anymore.

But they're making a big mistake. Commodities are breaking out right now. And according to history, we can expect the boom to continue...

Who wants to think about commodities in our AI- and tech-driven world?

Energy and copper prices aren't known for making flashy moves. Movements in lithium and iron ore don't grab quite as much attention as, say, the latest update about ChatGPT.

Still, eye-catching tech wouldn't be possible without these materials. Commodities helped build our modern world... And they'll help us move forward, wherever that may be.

So don't ignore the value of commodity investing – especially right now.

That's because the benchmark Bloomberg Commodity Index has been booming in recent months. It's up 6.2% since bottoming in February. Take a look...

Commodities have had a rough couple of years. We saw a pandemic-induced boom in 2020 and 2021. But after peaking in 2022, prices dropped 30%.

The bottom appears to be in, though. Commodities prices recently rallied as much as 11% since their February low – hitting a 26-week high in the process.

To see what that means going forward, I looked at each new instance of this setup since 1970. These events have only happened 63 other times since then. And history shows we can expect big outperformance in the months ahead...

Commodities are a solid wealth builder over time. They've increased 3.5% per year since 1970. That's roughly in line with inflation. But you can do much better if you buy after setups like today's...

Similar instances led to 2.1% gains in six months and 6.1% gains over a year. Those aren't massive overall returns. But it's hefty outperformance versus the typical buy-and-hold return for commodities.

Plus, commodities have a history of major booms and busts. Prices don't move much over long periods. But this asset class sees plenty of huge rallies – and crashes – in the short term.

Given that cycle, and the fact that commodities have crashed in recent years, this could be the start of a larger boom in this space.

Keep a close eye on commodities in the months ahead. This asset class is setting up to outperform... And now might be the perfect time to consider adding exposure in your own portfolio.

Good investing,

Brett Eversole

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