Hard Assets and Commodities as Important Asset Classes

By John Johnson on May 1, 2026

The first quarter was the clichéd roller coaster ride.  The market climbed steadily in January and February and in March, it rolled over, up and down and up.  It reminds me of when my son was 10 years old and we stopped into Busch Gardens on a chilly spring day.  The park was empty.  We rode the Alpengeist – 195 feet tall, 6 inversions, 67mph top speed.  When the ride came back to the station, my 10-year-old grabbed my hand and tugged me until we were both running out the exit right back through the entrance to empty car.  Over and over and over. 

He was so enthusiastic, I felt like I could not get off.  I finally had to break his emotional connection with the thrill and take him away for a cold soda.  My head ached, my body had a hard time finding equilibrium and the security of firm ground.  Markets can be like that and breaking an emotional connection is important when you feel the value of what you own is not represented by the price.  We feel like this volatility will become more and more prevalent.  Why? 

One of the things we believe at Morgia Wealth Management is that the coming decade will be defined globally by how investors, governments and populations manage growing debt and the cost of interest that services the debt.  In this world, we are watching governments stimulate their economies (placate the population) by printing money.  This money printing also drives the value of their currency down, thus lowering the amount of debt.   

Inflation, debt, and interest rates all can contribute to long-term potential volatility in equities.  There is even long-tail risk that the dollar’s position as the world’s reserve currency is at question.   How do you manage the long-view in that type of world?

We believe hard assets can perform well in this scenario for a few interconnected reasons:

Real Asset Protection
Commodities are physical, tangible assets — oil, gold, copper, wheat. Unlike paper currencies or bonds, their intrinsic value can’t be diluted by printing more money. When the dollar loses purchasing power, it simply takes more dollars to buy the same bushel of corn or ounce of gold.

Inverse Dollar Relationship
Most commodities are priced in USD globally. When the dollar weakens (as tends to happen with heavy money printing), commodity prices rise mechanically — foreign buyers can now afford more, demand increases, and prices adjust upward. This is a structural hedge, not just a correlation.

Inflation Pass-Through
Commodities sit at the beginning of the supply chain. Rising input costs flow through to finished goods, but commodities themselves are the input — they capture inflation at the source before it gets diluted across the production process. This makes them one of the most direct inflation hedges available.

Fiscal Deterioration Signal
Rising national debt signals potential future monetization — governments may eventually inflate away debt rather than default outright. Sophisticated investors can anticipate this and rotate into hard assets before the full inflationary effect is felt, which itself drives commodity prices higher.

Gold Specifically
Gold has a 5,000-year track record as a monetary alternative or a tradable item that holds relative purchasing power. When confidence in fiat/sovereign currencies erodes, gold can function as a reserve asset outside the banking system — no counterparty risk, no default risk. Central banks themselves buy gold when they’re nervous about dollar stability.

Supply Constraints Amplify the Effect
Unlike financial assets, you can’t “print” more copper or crude oil. Supply is constrained by geology primarily and capex cycles as a second choke point.  Demand surges from dollar weakness hits an inelastic supply curve, meaning a supply that can’t react quickly to meet the demand.  This magnifes price moves.

The Key Risk to Keep in Mind
Commodities don’t produce cash flows — they don’t pay dividends or interest. They’re a store of value and inflation hedge, not a compounding asset. They work well within a diversified portfolio in an allocation (often 5–15%) alongside equities and bonds, not as a standalone position. They can also be volatile and very susceptible to a deep cut in demand during a recession, even when inflation is high.  It’s a rough situation where demand plummets because of a recession but prices still increase.  That type of scenario was prevalent in the U.S. during the mid and late 1970’s.  Stagflation is brutal and a tricky environment to navigate.

This comes down a core thesis: hard assets help preserve real purchasing power when paper assets are being debased.  We see this connected through some major trends: debt expansion, money printing, dollar weakness, and commodity outperformance.​​​​​​​​​​​​​​​

What does this mean going forward – is this the repeating ride on the Alpengeist again?  It is entirely possible that the debt cycles will continue and uncertainty will impact volatility. 

One way to step off your ride is to choose to do so by looking at your portfolio. To what extent do you agree with this thesis?  Based on that, have you made the right decisions around asset allocation within your portfolio?  Only you can decide when it is time to step off the rollercoaster despite the emotional tug of the thrill of the ride and find that cold soda.