What Rising Commodity Prices Mean for Investors

On the last trading day in 2010, gold prices traded up $15.50 to more than $1,421 an ounce and oil prices ended above $91 a barrel. Indeed, gasoline prices are back above $3 a gallon, up more than 44 cents from last year!

But these hard assets aren’t the only things climbing… look at the prices of these other commodities. Coffee futures have jumped more than 60% in 2010, and sugar has nearly doubled in the past six months alone.

Wheat prices are up more than 46% in the past six months despite seesawing through much of the third and fourth quarters. Corn’s up nearly 57%, and soybeans are up better than 51%.

I could go on and on…

What’s behind these moves in commodity prices, and what does this mean for your investment portfolio?

In past Smart Investing Daily issues, we’ve made the connection between the U.S. dollar’s performance against other currencies and the rise and fall of commodity prices.

This link is simple: Every commodity priced in dollars is subject to price fluctuations based on the value of that dollar. That’s why some commodities make great hedges against a falling dollar.

What’s Behind Commodity Price Gains?

But is the U.S. dollar behind these major commodity price gains? (more)