Investments in commodities are attractive ventures to many investors as a means of diversifying income. According to analysts at Maryland-based investing research publication company Stansberry Research, this can be attributed to the uniquely cyclical nature of commodities, which can be characterized by the following:
- The industries that produce them require vast amounts of capital and time to thrive, which means that once operations start, production will likely continue regardless of subsequent price changes.
- Commodity prices tend to rise and fall at very large ranges, meaning high potential for enormous returns. These are referred to as “booms” and “busts”, respectively.
- Prices in commodities don’t typically reflect the prices of stocks and bonds.
Stansberry Research Analysts Steve Sjuggerud and Brett Eversole have recently reported that the prices of commodities have plummeted more than 60% this year. Both anticipate a boom, though which commodity may offer the best return remains to be seen. However, both suggested investors to pay attention to the price of coffee. Stansberry Research data indicates that there is currently a bear market on the commodity; The price per share of coffee in 2018 is $15 per share, a large depreciation in value from its prices in 2014 (where the price surged 92% from less than $20 to over $40 per share) and in 2015 (a 45% increase in price, from just over $30 to over $40 per share) (Facebook).
Analysts at Stansberry Research have extensively studied boom and bust cycles very similar to this one countless times, and this trend is no different. Although Sjuggerud has suggested waiting for the price of coffee to rise again before investing in coffee, the recent price trends make coffee a strong candidate for a lucrative investment.
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