Commodities: A Hidden Gem in Your Portfolio?
We will explore investing in commodities 2025, from Gold to Cocoa’s skyrocketing prices, to hedging against market volatility and Trump’s tariffs. We often see investors overlooking commodities in their portfolios, let us show you how you can invest in this asset class.
A New Era Under Trump (and Beyond)
Looking back at January 25, 2017—Donald Trump officially became President of the United States. He promised a major turnaround for the U.S. economy. But the stock market didn’t exactly celebrate. In the first eight weeks of his presidency, the S&P 500 fell nearly 7%.
Interestingly, while the U.S. market struggled, European markets performed well, with the Dutch index climbing about 5% in early 2017, and other markets like Spain and the UK also showing strength. So, was the “Trump bump” real? Maybe not. But his policies, especially those around trade, did influence one key area: commodities.
Commodities in the Crossfire in 2025
Trump’s tariffs—like those on imported steel—sparked tensions with global partners and put commodities front and center in the trade war narrative. The looming trade war risks deepening the existing crisis in the steel market due to an economic slowdown in China resulting from the bursting of its real estate bubble in 2021.
But regardless, no country has positioned itself more strategically in this space than China. Over the past few decades, China has quietly secured global access to crucial raw materials. In sectors like semiconductors and electric vehicles (EVs), China holds dominant control over critical commodities. For example, it controls:
- 99% of gallium, used in semiconductors that power AI models
- 95% of magnesium
- 80% of natural graphite
These aren’t household names, but they power the tech and EV revolutions.
If you are interested in investing in semiconductors, we recommend you also read our analysis on Semiconductor Giant TSMC: Is It Still A Buy?
The Big Players
While China dominates the supply, globally traded commodities are more familiar: crude oil, natural gas, gold, coal, and iron are the most traded. So where should investors look in 2025?
According to outlooks, precious metals are the most promising. Gold, silver, platinum, and palladium are at the forefront. In 2024, gold rose nearly 24%, and central banks were major buyers—led not by the U.S. or China, but by Poland, followed by Turkey and India.
Why? Because in times of volatility, gold offers stability. It doesn’t correlate with stocks and can’t go to zero—making it a hedge against uncertainty.
Cocoa
It is also agricultural commodities that have seen upward price pressures due to externalities. Cocoa emerged as one of 2024’s best-performing commodities, with prices soaring over 100%. This dramatic rise is fueled by severe weather disruptions in key producing regions, rising production costs, and ongoing supply chain challenges. With demand holding strong, these pressures have created a perfect storm for higher cocoa prices.
If you are interested in investing in cocoa, we recommend you see our article on Unlocking Opportunities: Investing in Cocoa
Commodities as a Hedge
One of the key reasons investors turn to commodities, especially precious metals, is their role as a hedge. Commodities often have a negative or low correlation with equities, meaning they tend to hold value or even rise when stock markets fall. This makes investing in commodities in 2025 a powerful tool for managing risk and protecting your portfolio during times of market volatility.
Source(s): WSJ; LBMA; own analysis.
As can be seen from the above graph, in 2022 the BCOM, an index of a diverse basket of commodities, surged due to the outbreak of war between Russia and Ukraine (two large exporters of commodities). This event was a factor in the decline in the S&P 500, with greater angst among investors regarding the global security situation. Commodity positions would have acted as a hedge to equity positions during geopolitical turbulence.
Furthermore, we can observe that between 2022 and 2025, that declines in the S&P 500 are accompanied by gains for Gold, as investors seek haven assets. However in that period the two have broadly tracked one another.
In 2025, we are seeing that gold has been outperforming the S&P 500 with investors’ fears of the impact of Trump’s tariffs on firms’ financials and the US economy. We have also seen a price correction of tech and AI stocks in 2025 from the stratospheric valuations in 2024, putting downward pressure on the S&P 500, and seeing gains for safe haven commodities such as gold.
If you are interested in investing in future growth technologies and AI, we suggest you read our article on Decoding the AI Investment Landscape: Separating Bubble from Brilliance
How to Start Investing in Commodities in 2025
You can trade commodities through futures, but these are complex and risky for private investors. A better approach is via ETFs.
- WisdomTree Physical Precious Metals (VZLE) ETF offers exposure to gold, silver, platinum, and palladium.
- WisdomTree Broad Commodities (PCOM) ETF gives access to energy, agricultural, and industrial commodities, including soybeans, aluminum, and coffee.
What’s the Right Allocation? We recommend a diversified portfolio:
- Core holdings in global or S&P 500 ETFs
- Sector-based ETFs (e.g. technology, healthcare)
- 5–10% in commodities—to protect against volatility and provide uncorrelated growth.
Commodities are not the only hedge against 2025’s volatility, we have identified these Defensive Stocks 2025 That Stand Strong in Trade Wars.
Final Thoughts
Commodities are often forgotten by retail investors. But they shouldn’t be. They’re cyclical, tangible, and increasingly central to geopolitical and economic trends. Whether you’re protecting against inflation, diversifying your risk, or looking for growth, commodities deserve a place in your portfolio.Investing in Commodities in 2025.
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If you’d like to further explore how to hedge your positions with commodities, contact us an schedule a visit our office on Marbella’s Golden Mile.
We wish all investors a successful 2025! Trade Saf€.
Kaspar Huijsman
Kaspar is a passionate investor known for his thorough analysis of news and market
dynamics. With over 25 years of experience in the financial world, he never relies on half- truths and always prioritizes knowledge.
“An investment in knowledge pays the best interest.”
— Kaspar Huijsman
The information in this article should not be interpreted as individual investment advice. Although Hugo compiles and maintains these pages from reliable sources, Hugo cannot guarantee that the information is accurate, complete and up-to-date. Any information used from this article without prior verification or advice, is at your own risk. We advise that you only invest in products that fit your knowledge and experience and do not invest in financial instruments where you do not understand the risks.