Recently, Australians received unwelcome news: the Reserve Bank of Australia (RBA) announced that inflation is rising again. Already burdened by the high cost of living, Australians are anxiously awaiting next month's RBA meeting and whether a rate hike is possible, writes Wealth Within chief analyst Dale Gillham.
The current inflationary situation has many pondering how to mitigate the pressure, leading to the question: Is it time to consider commodity-related stocks?
Historically, commodities such as gold, oil, and natural gas have been effective hedges against inflation. Australia is abundant in these resources and hosts numerous companies in these sectors on the ASX.
Here are three notable ones:
- Westgold Resources Ltd (ASX:WGX, OTC:WTGRF) (ASX: WGX), an Australian gold producer based in Western Australia, has seen impressive growth since relisting in 2016. Its share price has surged over 200% since November 2022, recently surpassing the float price of $1.50. The share price has also recently cleared the $2.60 level that has previously held up the stock. With the most recent break, the stock is now positioned to target the previous all time high at $3 and beyond.
- Santos Ltd (ASX:STO), an oil and gas producer with nearly 40 years of trading history on the ASX, offers an intriguing opportunity despite its share price remaining around $7 for the past two years. The extended sideways movement at $7 suggests a potential strong breakout is on the horizon. As such, I would encourage you to watch this stock closely for a decisive move above $9, which could signal the beginning of the next bullish phase.
- Beach Energy Ltd (ASX:BPT, OTC:BEPTF) (ASX: BPT), operating in the hydrocarbons sector, is well-positioned to perform during inflationary periods. Like Santos, Beach Energy's share price has been stagnant since February 2020, indicating potential pent-up demand ready to be released. A strong break above the $2 level could lead to a run back to $3, offering a fantastic investment opportunity.
Therefore, as inflation rises I would encourage you to consider these commodity-related stocks as a strategic move to hedge against economic pressures. They have the potential to put some well-needed dollars in your hip pocket.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au.