Despite the recent pullback in commodities prices, the recovery in the global economy and eventual threat of inflation could make commodities a steadier bet than stocks in the coming months.
The reasons go beyond conventional wisdom during times of inflation, when stocks usually falter as escalating prices erode buying power and discourages investors from the risk of stocks.
Instead, commodity backers believe the rise of emerging market economies such as China and Brazil will boost demand even further and put to rest fears that surging commodity prices are creating a bubble.
"There's a significant portion of the world that is emerging from third-world country status," says Rick Bensignor, chief market strategist at Dahlman Rose in New York. "Look at emerging market nations and pent-up demand for raw goods across the commodity spectrum, and the growth potential in emerging markets. There is huge upside for commodities for years to come."
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