Any reasonable and wise investor will tell you never to put all your eggs in one basket. To prepare for any market turbulence, it is necessary to diversify your portfolio and place your cash in different assets rather than, say, just stocks. For this, raw materials are often an excellent investment vehicle for many people.
However, like other financial markets, commodities have been significantly affected by the coronavirus epidemic. To do this, finding the best commodities to invest in 2020 becomes a difficult task for today’s investors.
To make it easier for you, in this article we are going over some of the best options to consider in April.
The latest overview of the raw materials market
The raw materials market has been going through a period of turbulence since the start of the year. The first and main trend is the decline in crude oil prices. In early 2020, WTI oil was trading at $ 61 a barrel. However, it has since plummeted dramatically, currently priced at $ 26.
The drastic fall in oil prices is mainly due to the price war between Saudi Arabia and Russia. Earlier in March, Saudi Arabia cut its export price for oil to $ 30 a barrel. The move sent Brent and WTI oil into freefall, and the two have since experienced a downward spiral.
The prices of other commodities such as silver and platinum have also been affected by the deadly pandemic. Silver, which was worth $ 18 an ounce at the start of the year, is now trading at $ 14 an ounce. Platinum is also down from $ 1,022 to $ 714 an ounce.
While gold fell sharply in March, it rebounded to trade at its January 2020 levels of $ 1,590 an ounce. Indeed, more and more investors now consider this shiny precious metal as a haven of peace while stocks and cryptocurrencies continue to disappoint with their poor performance.
Main commodities to invest in April
Looking at the growing economic uncertainty, international investors are now asking: “What are the right commodities to invest in April?” For this we are looking at some of the best products in which you can invest right now.
Perhaps gold could be the best product you can invest in right now. For centuries, it has served as a refuge in the global economy, which we need more than ever.
In times of crisis, investors have always sought assets with high intrinsic value to protect their portfolio and ensure that they do not lose wealth in the event of a stock market crash or recession. The prices of these shelter assets generally increase during the downturn.
For this, gold should appreciate in value over the next few months. Thus, making it one of the best staples to invest in April 2020.
In early 2020, gold was trading at $ 1,552 an ounce. However, the price is now rising steadily after falling last month and is currently trading near the $ 1,600 mark. Analysts believe it could reach a new high and surpass the $ 2,000 mark this year.
The crude oil that was on the list of the best commodities to trade in April 2020 could surprise due to its currently low valuations. However, as an investor, the first rule is to buy at a low price.
The price war between Russia and Saudi Arabia is very unlikely to last forever. As the two giant oil economies change their differences, there is still room for improvement and oil prices may rise again.
Trade Brent Crude Oil Spot CFD
Remember that crude oil is refined into products such as gasoline, plastics, drugs, ink, cosmetics, fertilizers, asphalt, etc. So the demand for this product will always exist.
Once the coronavirus pandemic, which forces millions of people around the world to stay at home, is over, the use of oil is likely to skyrocket, raising prices to new records.
If you’re looking for another great product to buy right now, copper has the right to be on your list. The drop in the global manufacturing sector due to the Covid-19 spread saw demand and, subsequently, the price of the metal plunge in recent months.
In early 2020, copper was trading at $ 2.83 and has been on a downward spiral ever since. It is currently trading just above the $ 2.1 mark.
Copper is a very versatile product used for wiring, motors and construction. To do this, we expect demand and prices for the metal to rise after the pandemic ends and countries to compensate for the industrial damage caused by the disease.
Another product that has been severely affected by the coronavirus epidemic is platinum. The metal was trading at $ 981 an ounce in early 2020, but has now dropped to $ 714. The decline comes as power plants around the world that mainly use platinum are currently closed.
It is very likely that demand for the metal could increase after the pandemic, and its value could recover and reach the $ 1,000 mark. Therefore, at its current price, platinum could offer sophisticated investors an excellent buying opportunity.
One of the best investment vehicles since the 2008 financial crisis has proven to be palladium. This metal is very rare and has various applications of use. In addition, this lucrative metal is a relatively safe product because it is not affected by politics or inflation, which makes it a major asset for many investors.
The value of palladium has grown steadily over the years, and some analysts believe it could rise even more in 2020. It was trading at $ 1,954 in early 2020 and reached $ 2,233 a few days ago .
Short-term forecast for the commodities market
Most analysts are bearish about the short-term outlook for the majority of commodities. Crude oil prices, for example, do not seem optimistic in the short term. Analysts see crude oil prices drop below $ 20 in the weeks and months to come. It could probably trade at $ 18 by the end of 2020, which means prices are not expected to recover in the foreseeable future.
Platinum and copper also appear bearish, with investors expecting further losses over the next two quarters.
Meanwhile, gold has bullish expectations as portfolio investors see it rise 2% and 5% in the next three and six months, respectively. Things are also looking good for palladium, which could increase by 2% and 7% in the next three and six months, respectively.
However, as the financial markets have experienced multiple ups and downs in recent weeks, we recommend that you arm yourself with as much knowledge as possible. When choosing the products to invest in, take into account the latest news, market trends, expert advice and technical analysis.
If you think you are not ready to make long-term investment commitments, but still want to try to take advantage of market volatility, you can do so through difference contracts (CFDs).
You can learn more about CFD trading with free online courses and find out how to trade CFDs in commodities by reading our full guide. Always stay up to date with the latest market news with Capital.com.
Read more: Analysis of oil prices in April 2020: the truce of the Saudi-Russian oil price war fails