Commodities



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Volatility
Unlike investing in the stocks of companies which we can calculate a value for, commodities are purely a technical play.  Still, because it involves the perceptions of many, many market players, trends inevitably show up.  The current volatility creates many opportunities, but ones mostly of a shorter duration. 

Inflation/Deflation
Some advisors see gold as a long term hedge against inflation.  Despite the rise in energy and food prices, I am not worried about the effects of inflation on my portfolio as long as unemployment remains higher than normal.  This combined with the baby-boomers turning into savers from spenders would suggest demand, in general, should be lower than what we have experienced over the last couple of decades.  Until governments world wide have dealt with the massive debt issues, I remain concerned about the prospect of deflation, as we just witnessed in the prices of commodities as a little deleveraging took place. 

Commodity ETF's
Many Exchange Trade Funds (ETF's) based on commodity futures contracts (as opposed to ETF's based on the shares of companies that produce the commodities) have become very popular and seem to be having an effect on commodity prices.  Do you invest in commodity ETF's?