schweser notes4 P30, 2nd para. non-storable commodities (e.g. wheat) values are negatively affected by unexpected increases in inflation. why is it negatively? may I have a sample?
If inflation is high, you would want to own storable commodities, as their value should increase. A good way to remember this is that gold is generally considered a hedge against inflation. When inflation is high, you want to hold onto commodities as their value should go up. As wheat is perishable, it does not store value like other commodities.
tks, underhedged
so we are saying that storable commo are a hedge against inflation and perishable ones are not? I remember having seen somewhere something related to energo commo when dealing with inflation…
CFA curriculum…Energy, Industrials, and precious metals are a good hedge against inflation because they partake in the intensity of economic activity. NOT ALL STORABLE COMMODITIES ARE A GOOD HEDGE THOUGH! There is a nice chart somewhere in the book.
the key is if commodity directly linked to intensity of economic activity. If yes, positive correlation.