What Are Commodity Markets?
Simply put, commodity markets are the markets for raw materials and resources that form the foundation of the global economy. These include precious metals (gold, silver, platinum, etc.), energy commodities (oil, gas, coal), industrial metals (copper, aluminum, nickel), and agricultural products (wheat, corn, coffee, sugar, etc.).

Unlike stocks or bonds, these assets have no issuer or management team — their value is determined solely by global supply and demand. Prices are influenced by natural factors (such as harvests and climate), geopolitics (conflicts, sanctions), technological development, and the pace of industrial growth.
Independence from the Stock MarketOne key feature of commodity assets is that they often behave independently from traditional financial instruments. For example, the prices of oil or grain may rise even when the stock market is falling — and vice versa.
This means adding commodities to your investment portfolio can help diversify risk, since they are driven by different factors than stocks and bonds. In fact, historically, real assets tend to increase in value during economic crises or inflation spikes.

As analysts point out, during periods of crisis, commodity prices tend to rise alongside inflation. In other words, when your savings are losing value in a bank account due to rising prices, commodities can help preserve — and even increase — your purchasing power.
Real-World Example: A Volatile Global MarketLet’s take a recent example. In 2022, amid geopolitical tensions and supply disruptions, the world experienced the biggest surge in commodity prices since the oil shock of the 1970s.

According to the World Bank, that year:

• Energy prices rose by more than 50%
• Other commodities (metals, agricultural goods) increased by almost 20%
• Oil prices reached record highs (Brent averaged ~$100 per barrel — about 40% higher than in 2021)
• Wheat and other grains surged by around 40%, setting all-time price records

For investors who allocated part of their capital to commodities, this turbulent period didn’t result in losses — it turned into profit. The rise in commodity prices offset the drop in stocks and other traditional assets. In this case, diversification through commodities acted as a financial safety net.

Gold – The Legendary Guardian of Wealth
Among all commodity assets, gold holds a special place. It’s no coincidence that investors call it a “safe haven”: when markets are in turmoil, thousands of people turn to gold, trusting in its ability to preserve value. Gold is a rare precious metal — it doesn’t rust, doesn’t degrade over time, and is limited in supply. It is valued globally: by central banks (as part of their reserves), jewelers, and tech companies alike. But the most important factor is psychological — generations of investors believe that gold will protect their wealth from any disaster. This belief often becomes self-fulfilling: rising demand pushes prices higher, and gold lives up to expectations.
Protection from Inflation and CrisesHistorically, gold has served as a hedge against currency devaluation. During periods of runaway inflation, when paper money loses purchasing power, gold tends to rise in price — essentially offsetting the impact of rising costs. A vivid example is the inflation surge of the 1970s: amid the oil crisis, gold prices skyrocketed.
Gold also acts as a shield during financial turmoil. When stock markets crash or banks collapse, investors move into precious metals, driving prices up. Academic reviews have shown that gold truly acts as a strong safe haven during market downturns triggered by economic shocks or geopolitical risks.
Consider the start of the COVID-19 pandemic: in just the first six months of the crisis, gold prices rose by 22%, despite inflation staying below 1.5%. Fear and uncertainty drove stock prices down — but gold surged, cushioning the blow for those who held it.
Recent Highs and Trust in GoldWe’ve seen fresh confirmation of gold’s safe-haven status. Between late 2023 and early 2025, amid global economic and political uncertainty, gold prices surged to record highs. From the beginning of 2024 to March 2025, gold rose by over 40%, exceeding $3,000 per ounce.
This growth isn’t due to jewelry demand or industrial use — it’s fueled by a global investor rush to shield capital from inflation and potential crises. Notably, it’s not just individuals who are turning to gold: central banks across the world have been increasing their gold reserves.
Following the freezing of part of Russia’s assets in 2022, many countries began reassessing their dollar dependence and boosting gold in their reserves. As a result, in 2024 alone, central banks purchased a record 1,045 metric tons of gold — and the trend continued into 2025. This institutional demand further fueled the price rally.
Conclusion: Gold remains in high demand — both for retail investors and entire nations — as one of the most reliable assets available.
Silver and Platinum: More Than Just Gold’s Little BrothersBesides gold, other precious metals like silver, platinum, and palladium also play an important role. Silver has long been viewed as gold’s “younger brother” — more affordable, but still a potential store of value. Often, when gold prices rise, silver follows — sometimes even outpacing gold in percentage terms. However, silver tends to be more volatile due to its broader industrial use.
Platinum and palladium are even rarer. They are highly valued in industry (for catalytic converters, electronics) and in the jewelry sector. In stable times, their prices mainly reflect industrial demand. But in periods of instability, these metals may also act as defensive assets, thanks to their limited supply. For instance, in 2022, due to sanctions and supply disruptions, palladium temporarily reached record-high prices.
In summary, precious metals — especially gold — are often included in portfolios to preserve value. Gold remains the standard, but adding silver or platinum can enhance resilience and diversification.

Energy Commodities: Oil and Gas
While gold shines in the spotlight, oil often acts as a barometer of the global economy. It’s the lifeblood of industry: oil prices influence everything from gasoline at the pump, to airline ticket costs, to household heating bills.
In stable conditions, oil prices reflect the balance of demand (economic activity) and supply (OPEC+ production, shale output, etc.). But in times of crisis, oil can behave unpredictably. For example, during global recessions or lockdowns, oil demand drops — as seen in 2020, when pandemic-related shutdowns briefly drove oil prices below zero.
Conversely, geopolitical turmoil and inflation often drive oil prices up. Conflicts in the Middle East, sanctions on major exporters, or production cuts all lead to price spikes. In 2022, war and sanctions pushed oil to levels not seen in nearly a decade.
High energy prices also fuel overall inflation — but investors who timely positioned themselves in oil (via futures contracts or oil company stocks) saw notable returns.
📌 Conclusion: Oil and gas are not “safe havens,” but rather hedges against inflation and supply shocks. Including them in a portfolio is useful — though it’s important to remember their cyclical nature: after surges often come pullbacks, and vice versa.
Agricultural and Other CommoditiesAnother major group includes agricultural goods and raw materials for production. These are food products (grain, oilseeds, sugar, coffee, meat) and materials (wood, cotton, rubber, etc.).
In peaceful times, food prices are relatively stable. But during periods of disruption, agriculture takes center stage — people always need to eat. When a shortage occurs — due to drought, poor harvests, or war — food prices can skyrocket.
Rising food prices hit everyone, but those who invested in agricultural commodities stand to benefit. Take the 2022 grain market as an example: with both Ukraine and Russia being major exporters, the war drastically reduced supply. As a result, wheat prices surged by tens of percent, reaching record highs.
Investors holding grain futures or agriculture stocks profited significantly.
Other raw materials, like metals (copper, iron ore), also play a role. Copper, for example, is considered a leading indicator of economic cycles — demand rises during industrial booms. Yet long-term supply constraints support its price as well.
Diversification Through CommoditiesEach type of commodity reacts to a different set of drivers — many of which are uncorrelated with traditional financial markets. That’s why combining multiple categories (precious metals + energy + agriculture) can dramatically reduce portfolio volatility.
When one asset drops, another may rise — and your capital stays protected.

The Role of Commodities in a Portfolio
Financial experts largely agree: for effective diversification, a portion of your portfolio should be allocated to commodity assets. For example, the famous All Weather portfolio by Ray Dalio distributes investments across various asset classes — including stocks, bonds, commodities, and gold — to ensure stable performance under any economic condition. In this structure, gold and commodities are considered essential balancing elements.
Similarly, major banks recommend allocating a small percentage of capital to commodities. In a conservative portfolio example from Alfa-Bank, about 10% of funds are allocated to commodities (gold, energy, metals) specifically to protect against inflation and crises.
Of course, the ideal percentage depends on your goals and risk tolerance — for some it may be 5%, for others as much as 15%. But the key idea is clear: completely ignoring this asset class is unwise if you’re seeking long-term portfolio stability.
Ways to Invest in Commodities: 🟡 Physical Gold and SilverThe most straightforward and tangible option is buying gold or silver bars and coins. You become the direct owner of the precious metal. In times of crisis, physical gold becomes especially valuable — it can be exchanged for goods or services and remains outside the banking system.
However, there are caveats:

• Bars must be stored safely (in a home safe or bank deposit box)
• Large bars are harder to sell or split quickly
• Small coins often come with high premiums

Still, many investors prefer to keep a strategic reserve of physical gold close at hand.
🏦 Unallocated Metal Accounts (UMA) and Metal DepositsSome banks offer accounts in grams of gold, silver, or platinum (known as unallocated metal accounts or UMAs). Essentially, the bank holds the metal, and you own the balance on paper.
It’s more convenient than storing bullion, but there are risks:

• If the bank has issues, you could lose access to your metal
• Government deposit insurance does not cover metals
• With metal deposits, you deposit gold instead of cash, and receive that metal back with interest — assuming the institution is reliable

These tools offer ease and flexibility, but choosing trusted institutions is essential.
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● ETFs and Commodity Mutual Funds
A modern and popular approach is investing in exchange-traded funds (ETFs) that are tied to the price of specific commodities or a basket of raw materials. There are ETFs for gold (which physically hold the metal in vaults and issue shares fully backed by gold), oil, agricultural goods, and even broad commodity indexes.
By purchasing shares of such a fund, you are essentially investing in the commodity — without having to deal with physical storage or direct purchasing.
✅ Advantages:

• High liquidity (you can buy/sell on the stock exchange anytime)
• Low entry threshold — suitable even for small capital
• Easy diversification

⚠️ Disadvantages:

• Management fees
• Exposure to market volatility

Still, gold ETFs revolutionized the market by making precious metals more accessible to a wider range of investors. In just a few clicks, you can add a piece of gold or oil to your portfolio.
● Stocks of Mining and Commodity Companies
Another approach is to invest in businesses connected to commodities — such as gold mining companies, oil and gas giants, metal and mining corporations, and agricultural producers.
Their stock prices typically correlate with the price of the underlying commodity:

• Gold rising → gold miners’ stocks rise (plus dividends)
• Oil surging → oil companies earn more and their shares benefit

📈 This method is appealing because it offers exposure to both commodity prices and company performance. But it also introduces corporate risks — such as poor management decisions, debt, or operational failures.
This route is closer to stock investing than to direct commodity investing.
Many investors prefer to balance risk by combining different approaches — for example:
📌 holding both physical gold and oil company stocks in their portfolio.

● Futures and Derivatives
For advanced and experienced investors, futures contracts, options, and other derivatives provide direct access to commodity markets. A futures contract allows you to buy or sell a commodity at a fixed price at a future date — it’s the core tool of exchange-based commodity trading.
Using futures, you can:

• Speculate on price movements in oil, gold, grain, and more
• Hedge risks — just like farmers and producers originally did to lock in prices

⚠️ However, trading with leverage and short-term contracts requires deep knowledge and strict discipline. Without that, you risk losses instead of protecting your capital.
For beginners, derivatives are usually not recommended — it’s better to start with ETFs, unallocated metal accounts (UMA), or physical assets.
Still, it’s worth knowing that these tools exist — as you gain experience, they can give you more flexibility in managing the commodity portion of your portfolio.
💡 Tip: Start SmallIf you've never invested in commodities before, there’s no need to shift a large part of your capital right away.
🔹 Try investing 5–10% in gold — through a reliable fund or small bullion bars
🔹 Add about 5% into a broad commodity ETF or the stock of a commodity-focused company
🔹 Track how this affects your portfolio's performance
Most likely, you'll notice reduced drawdowns during market volatility.
Studies show that moderate gold exposure improves portfolio metrics. According to the World Gold Council, if a balanced portfolio had included just 10% gold, its returns over the past 20 years would have been 7% higher, all other factors being equal.
Gold has acted as a hedge and a profit enhancer at the same time.
Of course, each market cycle is different — but decades of historical data confirm the value of diversification through commodities.

We’ve explored how and why to include commodities in your investments. But the optimal asset allocation is different for every investor.
Your age, income level, financial goals, and risk tolerance all affect how much gold or oil makes sense specifically for you.
Some people feel confident with 5% of their portfolio in gold, while others are more comfortable with 15%.
So how do you make the right decision?
That’s where personal consultation with a professional becomes invaluable.
An experienced financial advisor will assess your overall situation and help build a tailored investment plan — including which asset classes to choose, in what proportions, and when to adjust your portfolio structure.
🔍 Why a Personalized Approach Matters:You could read dozens of articles (including this one) about the benefits of gold —
and still hesitate to act, or end up buying too much at the wrong time or in the wrong place.
A good consultant will walk you through every step:

• How to purchase the right commodities
• Where to buy them most cost-effectively
• How to manage tax implications
• How to space out your purchases over time
• How to rebalance your portfolio later

This gives you confidence and helps avoid many of the common mistakes beginners make.

If you want to protect and grow your assets, now is the time to get personalized professional support.
Book a Zoom session with Andrey Kompaniets — an expert in investment and capital strategy. During your private consultation, Andrey will analyze your financial situation, help you build an optimal investment strategy, and determine how to allocate your capital effectively across various instruments — including gold and other commodities.
As a result, you'll receive a clear action plan tailored to today’s volatile environment — one that helps you preserve and grow your wealth with confidence.
Don’t postpone important decisions — successful investing is all about timing.
With professional guidance, you’ll take a decisive step toward financial stability and peace of mind for the future!