4 commodities to invest in 2024

For much of 2023, the commodities markets walked on thin ice. That is, they were quite volatile and fluctuating.

Russia’s invasion of Ukraine, in addition to supply chain difficulties due to COVID-19, had caused commodity prices to soar in 2022. But the poor global economic prospects have made a market "tasteless", so to speak.

Some excitement returned at the end of 2023, when oil prices rallied following Hamas’s attack on Israel on October 7th. However, concerns about global demand amid stagnant growth have kept commodity indices lower.

Raw materials to monitor in 2024

However, in 2024 the supply bottleneck problems and the recovery in demand could make 4 commodity markets take off.

1) Crude oil

The first is crude oil. As of January 15th, the WTI is moving at $72.25 a barrel. Only on January 12 was it close to the threshold of $74 a barrel following the US and British attacks against the positions of the Houthis, the Yemeni rebels who had been bombing merchant ships in the Red Sea for a month. The geopolitical risk will significantly influence the price of oil during 2024, given the fact that the war between Hamas and Israel is unlikely to find a peaceful solution within this year.

Some analysts believe the new supply will combine with slow economic growth to cause a gradual decline in price, from above $90 in September 2023 to $80 a barrel or less during 2024. But this could push Saudi Arabia, the world’s biggest exporter, to announce deeper production cuts than the 1 million barrels a day cut - equivalent to 1% of global demand - adopted in July. Iranian production, especially if Iran were to directly go to war against Israel in support of Hamas, could also be affected by sanctions or transportation problems. This could create the conditions for a supply crunch when economic growth returns.

Attention: to invest in physical oil (which is only one component) it is necessary to use ETC. In order to invest in a basket of companies that extract oil, however, you need to use ETFs linked to oil.

The WisdomTree WTI Crude Oil ETC is one of the most traded USD oil ETCs and aims to replicate the performance of the Bloomberg WTI Crude Oil Multi-Tenor Excess Return Index through swap-based synthetic replication. The fund does not provide currency hedging (so beware of the risk of dollar devaluation if the Fed were to embark on the path of lowering rates as early as March-April). The ISIN code is GB00B15KXV33 / Ticker: CRUD.

2) Lithium/Cobalt

Some metals markets also appear vulnerable to scarcity risks and therefore potentially subject to increases.

As demand for electric vehicles continues to rise, many experts predict there will be increased pressure on the supply of resources such as lithium and cobalt. One of the ETFs that invest in battery companies is L&G BATTERY VALUE-CHAIN UCITS ETF. The Solactive Battery Value-Chain index tracks companies active in the development and production of batteries. Please note: this ETF is also unhedged. It does not use derivatives but uses the “Long-only” strategy, with a total physical replication. The Fund Currency is the US Dollar. ISIN: IE00BF0M2Z96 Ticker: BAT. Unfortunately, there are no ETCs on the commodity in question.

3) Copper

Watch out for copper instead, whose prices fell in 2023 due to low Chinese growth. However, especially in the second half of the year, if growth in Southeast Asia were to pick up, copper could be the commodity most affected by a price increase. An interesting ETC is always offered by the wisdom tree. This is the WisdomTree Copper. ISIN GB00B15KXQ89 Ticker: COPA.

This ETC tracks the Bloomberg Copper Index which in turn tracks the price of copper futures contracts.

4) Uranium

Finally, the hottest of all metals markets may be the ultra-niche uranium market. The search for stable sources of low-carbon energy and the war in Ukraine has made governments hungrier for atomic energy, just as coups and conflicts have disrupted uranium production.

Metal prices, already at their highest levels in a decade, could rise further as market deficits persist. I therefore recommend purchasing them in absolutely modest amounts within your raw material portfolio. Furthermore, the size of these uranium ETFs fluctuates between €130 million and €240 million. Therefore, they are quite volatile ETFs.

In any case, these are the 3 ETFs to focus on to invest in uranium:

HANetf Sprott Uranium Miners
ISIN IE0005YK6564 Ticker U3O8
The HANetf Sprott Uranium Miners UCITS ETF Acc tracks the North Shore Sprott Uranium Miners index. The North Shore Sprott Uranium Miners Index tracks global companies active in uranium exploration, mining and/or refining.

Global X Uranium
ISIN IE000NDWFGA5 Ticker URNU
The Global X Uranium UCITS ETF USD Accumulating tracks the Solactive Global Uranium & Nuclear Components index. The Solactive Global Uranium & Nuclear Components index tracks global companies active in uranium exploration, mining and/or refining.

VanEck Uranium and Nuclear Technologies
ISIN IE000M7V94E1 Ticker NUCL
The VanEck Uranium and Nuclear Technologies UCITS ETF A tracks the MarketVector Global Uranium and Nuclear Energy Infrastructure index. The MarketVector Global Uranium and Nuclear Energy Infrastructure index tracks companies from around the world operating in the uranium mining and nuclear energy infrastructure sectors.

DISCLAIMER The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings.

Original article published on Money.it Italy 2024-01-16 07:49:00. Original title: 4 materie prime da seguire assolutamente nel 2024