Investment Portfolio: Oil and gold mix well

Commodities’ trading was recently interrupted by Hurricane Sandy. However, such disturbance does not pose a threat to developing economies in terms of their growing presence in the global economic arena.  Those with existing oil investments or interests in other commodities should recognize this movement and seize the opportunity to widen their portfolio mix to include commodities that are advancing alongside this trend.

Even if the U.S. actively explores non-traditional sources of energy, the goal of energy sufficiency is unlikely to be realistic, at least in the short-term.  With the dwindling supply of oil and the growing gap between supply and demand, investors are encouraged to turn their sights to investing in oil or energy services firms.

One way this is explained is to realize that the world economy can be divided into two major components – the first is highly developed but financially distressed and the other is developing but with very bright financial and economic prospects.  Within the former, there is an ever-increasing demand from the middle class now; this is one of the major reasons why it’s a bull market when it comes to rare metals (like gold) and certain commodities.

For almost ten years, investment in gold has been highly recommended as a sound component for one’s portfolio mix, although the commodity still “has a long way to go.”  The so called “yellow metal” won’t top unless the speculative market goes out of control as it once did when the infamous dot-com bubble collapsed.

Meanwhile, Brazil, China, India, and Russia, countries that make up the “BRIC,” were identified as those whose economies are slowly developing and moving ahead. Now, economies of some Middle Eastern countries which appeared “less promising” years ago are also headed towards the same direction. These developments have spurred oil consumption and, despite bullish oil exploration, oil is unfortunately drying up.

While new technologies had since buoyed fracking activities, including those in the oil-rich Marcellus shale, the idea of U.S. energy independence would still be far-fetched.  While shale fields have energy potential, they also tend to mature within the short- to medium-term.  Production from this energy source tends to dwindle in a few years.

Investors are encouraged to purchase interests in oil and energy services firms specifically those that support deep offshore oil exploration. Firms such as GeoSpace Technologies, Core Labs and Drill Quip, are often mentioned as those that show strong investment potential.

It is always strongly recommended that investors position themselves strategically, putting some of their eggs in commodities or materials that emerging economies would need in order to advance further.