The price of crude oil has risen close to 20% over the past week. Should I buy it now if I expect geopolitical tensions to persist, or if something more drastic is likely?
In the article What to note when investing in commodities in Issue 1224, some basic principles of commodity investing were discussed. Specifically, when diversification is useful, the article explores the optimal allocation and key risks. For this issue, other key points to note when investing in commodities will be discussed, along with more in-depth, real-time examples.
Firstly, amid recent geopolitical tensions, the price of certain commodities, notably crude oil, has surged. As an investor, looking at the bigger picture, events like this, although rare, can and will happen over time. It is important to recognise this, and disciplined investment strategies can be crafted accordingly. Here is a chronological order of how and what to do in scenarios like these:
