Historical Commodity Prices

Commodities are an intelligent way for investors to reduce risks. This can be easily seen by looking at historical commodity prices over the last 20 years. Commodities such as oil, gold, silver, agricultural raw materials and even the beverage price index have all increased over a period of 12 months. The 12 month historical commodity prices show that crude oil has risen 20.20% while the agricultural raw material’s index has risen 38.86%. Why are historical commodity prices so important? They are important because they expose what is going on with not only the value of the dollar, but it also shows the direction of where our economy is heading.

Historical commodity prices also expose the rate of inflation with extreme accuracy. Since inflation directly impacts commodity prices, investors can accurately predict future prices on commodities such as gold, silver, oil and other commodities in the markets. The commodity price index also reveals hidden opportunities that investors can take part in. These opportunities are directly impacted by world events. For example, the current Middle East crisis that is going on in Egypt and Libya will raise the price of oil. The question is how much more expensive will oil be later this year?  Current predictions are saying that oil may see anywhere from $150 a barrel to $200 a barrel by the end of 2011.

By taking a look at historical commodity prices, the investor can look back at all the opportunities they could have made money. They also can take note of important patterns in the past that may allow them to predict what commodities will do in the future. The patterns found in historical commodity prices combined with current commodity prices will help investors make a decision when investing. Investors who take note of world events during the times of sudden drops or rises in commodities prices will notice opportunities that present themselves today.

Historical commodity prices reveal future opportunities in such a way that experienced investors will professionally create a strategic plan around them. When certain world events in the past caused oil to jump up in price, and similar events that are currently mirroring those past events is a significant insight on how to invest. However, these patterns and revelations are not easily found by the untrained eyes. New investors are encouraged to study and analyze historical commodity prices for future reference. It may take sometime before the investor begins to see sighs within the charts that end up turning on a light bulb over their head.

When investors take a look at historical commodity prices, they immediately notice one of the most important factors to know when investing. This factor involves the relationship between the price of commodities and the amount of money that is being printed. Actually, there is a third factor to take note as well. The price of commodities, the amount of money being printed and the worth of the dollar all coincide with each other, in one way or another.

Every time the Federal Reserve prints out money the dollar losses value. Every time the dollar loses value commodities go up. Every time commodities go up inflation goes up. There are all interlinked and directly affect one another and this can be seen easily by looking at historical commodity prices. Investors who know this much already have a jump start on the average beginning investor. When you hear about QE2, it’s time to invest into more gold. When QE3 is being announced, it’s time to invest in more gold. These are the simple fundamental aspects that are found in the markets every day.

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