Theme Overview
Commodities have historically been the most effective inflation hedge, significantly outperforming bonds and matching or exceeding equities during inflationary periods. Gold has served as a store of value for 5,000 years and has outperformed all major currencies over the past century. The post-COVID era of massive fiscal spending, elevated government debt levels (US debt-to-GDP above 120%), and potential currency debasement has renewed interest in commodities as inflation protection. Central bank gold purchases hit record levels in 2022-2024 as reserve managers diversified away from dollar-denominated assets. A portfolio allocation of 5-15% to broad commodities has historically improved risk-adjusted returns and provided inflation protection during the periods when it's most needed.